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Friday, April 13, 2012
David Glasner — Endogenous Money
More confusion. Scott Fullwiler responds in the comments.
Read it at Uneasy Money Endogenous Money
by David Glasner
(h/t Mark Thoma)
If the government announced tomorrow that it would henceforth never pay any more for anything (including labor) than the prices prevailing on April 13, 2012, you would ulitimately have no inflation. But what would that do to the economy, not to mention the Governement's ability to function, in the meantime?
Scott never replies once it starts getting good :(. I am sure he is way too busy though. Best to leave em with suspense ;).
ReplyDeletedidn't want to get into that particular debate, but there was a misrepresentation that many have been making of my post that I wanted to set straight.
ReplyDeleteGlasner: "the demand for and the supply of government currency is what determines the price level."
ReplyDeleteAs monopoly supplier of the govt currency, the govt can set the price wherever it wants, no?
Geoff -
ReplyDeleteTheoretically yes, practically no.
If the government announced tomorrow that it would henceforth never pay any more for anything (including labor) than the prices prevailing on April 13, 2012, you would ulitimately have no inflation. But what would that do to the economy, not to mention the Governement's ability to function, in the meantime?