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On Mon, 18 Sep 2000, Duncan K. Foley wrote:
> It's clear enough that speculation plays a role in the relative
> valuation of currencies. But at some point, it would have to play a
> role in the valuation of each currency against commodities, including
> labor-power, wouldn't it? It's rather strange to think of a worker
> selling her labor-power speculating on the value of the dollar, but
> in extreme inflationary situations, this must happen.
In extremis, speculation of this sort could determine whether a
worker is willing to accept money in exchange for labour-power,
or rather insists on a barter deal. Even short of that,
speculation could play a role (up to a point) in governing the
time derivative of the price level ("inflation expectations"
driving wage demands). But how would speculation determine the
internal value of a currency at a point in time (e.g. in the
absence of expectations of inflation)? Like Paul, I'm taken by
the chartalist idea that the basic determinant has to be the
relationship between the state's emission of money on the one
hand, and the demand for money that it creates via the tax
liability it imposes, on the other.
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