The government has the same pricing options with its money of any monopoly supplier of an absolute necessity. An analogy can be drawn, for example, with an electric utility monopoly although taxes give the currency monopolist a tool to regulate demand that the electric utility monopolist does not have.
How does the monopolist price his product? There are two options:
- Set price, p, and let quantity, q, float, or
- Set q and let p float.
The first option is generally preferred, with a gold standard or the proposed ELR program two examples of using the first option.
However, the government is currently employing the second option. It sets a budget that determines q (spending), and lets the market determine p (price level) as all purchases are made at market prices. If the monopolist decides to set q, and let the market decide p, it must constrain q so that demand exceeds q, or, for all practical purposes, the price of its product will fall towards 0. Government constraint of q to control p means using continuous unemployment and excess capacity to maintain price stability. Surely this would never be considered a viable option in running an electric utility monopoly, for example......
The ELR proposal uses the option of setting one price, the ELR wage, paying market prices for other purchases, and letting the total quantity of government spending be market determined.Warren Mosler, Full Employment and Price Stability
With a gold standard, gold can always be considered fully employed as gold can always be sold to the government at the fixed price. Likewise, with an ELR policy, labor can always find a buyer.
(h/t Anonymous from the comments)
Joe Firestone adds in a comment:
The "full employment and price stability paper byPaul Davidson[Warren Mosler] refers to the govt as the monopoly supplier of *its* money, or *its* currency.
Pavlina's paper refers to the govt as a "money monopolist" of the money it demands in payment of taxes.
Wray has argued in the past that "money" as the unit of account, or "money" as an institution, is a "public monopoly" - and distinguishes this from what he calls the particular "money-thing" such as currency or credit.
Easy to see why people get confused about all this.
13 comments:
Careful.
Only the introduction is by Davidson. The rest is by Mosler.
here's the paper http://www.jstor.org/stable/4538575
Thanks, Ramanan. Fixed.
This guy Warren is brilliant. Remind me never to debate him.
Hi, I posted the quote and the other points (in response to Joe Firestone, not by him).
I just read the name in big letters and bold font at the top of the essay, not the little name at the bottom.
At least I took the time to actually read the text. It would save quite a lot of wasted time and hot air if prominant critics bothered to do the same.
Studentee:
Valiant effort, well done.
But don't bother arguing with Cullen Roche, it's not worth it.
The main problem is that he doesn't seem to know how to distinguish between a reasoned argument and a piece of rhetorical nonsense. It can be very frustrating.
He is extremely sensitive to insults directed at him but quite happy to blithely dish out insults to everyone else.
He is a manipulative person who will twist your own words against you. It's enough to make anyone mad.
Just post your arguments here or elsewhere in future.
Still, your insults were over the top.
"Still, your insults were over the top."
agreed.
you let him get to you. When that happens, you lose.
Guys,
We really need to watch ourselves more in the future. Our conduct is turning very "austrian" as some have pointed out and that's not something to aspire to. I know it can be very frustrating to see Cullen and the others peel off from MMT, but we need to let them go. They are not the enemy. And they are not bad people. I've been reading Cullen's work for years and he's not a malicious person and I don't think MMR was started with a malicious intent. But if we let them distract us and anger us then they're going to win, we will lose and in the end, we will all lose by not getting our message out.
Stay focused. Stay cool. Stay calm. And stop going to MMR. Let them go quietly into the night into obscurity.
Also Mitch Green's excellent presentation
Money is No Object
The embed code is available at the site
I'm not concerned about those people 'peeling off'. I get irritated when they start making up all sorts of shit about important ideas.
This is how Cullen describes MMTers now:
"You’re a hate filled group"
He then goes on:
"We started MMR specifically because we just wanted to teach and give back and let OTHERS decide policy…."
Typically sanctimonious and misleading.
Because Cullen Roche doesn't want to openly admit that he prefers unemployment (having seen that it makes for bad PR), he now uses the excuse that he doesn't want to advocate ("impose") specific policies.
At the same time he keeps up his bizarre and distorted attacks on the JG (it's a bit like nazism and mass murder, apparently) and, of course, advocates policies.
Cullen Roche: it is because you are an offensive liar and a hypocrite that people don't like you, not because they are 'hate filled'.
I hope that clears things up for you.
Anonymous, you are holding on to this and it is getting the better of you. This is a tempest in a teapot, not worth getting excited over. If you are going to get angry, direct it at something that is really bad, and God knows, there's enough of that.
But guys, someone was wrong on the internet. What the hell was I supposed to do? :)
-Studentee
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