Re:[Some]THING TO ADD

Concerning the question of what level of gvt. deficit and/or debt ratio is
"unsustainable": As long as we consider the gvt. and the CB to be a single
unit, "a deficit" simply means that more HP money is created in the period
than destroyed (if I understand this right). There is no need of issuing
gvt. bonds to cover the "deficit".

The only reason to uphold a certain "buffer" of outstanding gvt. bonds then
seems for the gvt./CB to have an additional and fast economic control
instrument (through sales or purchases of same) in addition to the much more
sluggish control instrument of the gvt. budget. Gvt. bonds are not needed to
finance gvt. "deficits".

The sustainability issue then seems to disappear for the gvt. deficit- and
debt ratio The amount of HPM in circulation increases, but gvt. debt does
not. The remaining sustainability problem is not gvt. debt and deficits, but
inflation and the exchange rate.

Or that is the way it seems to me, trying to understand the
Bill/Randy/Warren way of thinking about this (which also appeals to me).

--o0o--

Now, to Tony, who mostly replies by referring to papers of his and C.
Panico. While I agree with him that people should read papers of those they
(seem to) disagree with, I think it is to go too far to suggest that mailing
lists are not suitable for discussions between academics in a field. I think
that both Bill and Randy have disproven this by enabling other participants
on this list to grasp some of their main points -- and see that there are
obvious very interesting disagreements in the heterodox camp -- without
having to read their papers and/or book(s) first. Again, this is not to
denigrate published work.

Cheers,

Trond Andresen
_____

PS: This is a line-wrapped message....
  ;-) ;-) ;-)
Received on Thu Jan 30 21:00:36 2003