[OPE-L:5359] [ALLIN] Re: use-value of money

Gerald Levy (glevy@pratt.edu)
Tue, 5 Aug 1997 20:50:21 -0700 (PDT)

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Subject: Re: [OPE-L:5336] Re: [CLAUS] RE: use-value of money

I once wrote:

> >Most fundamentally, though, why should a
> >capitalist, in 1997, be concerned about the rate of exchange
> >of the dollar for _gold_ in future, rather than the future
> >rate of exchange of dollars for labour-power and other
> >commodities.

To which Ducan replied:

> I think I agree with this point. But doesn't this lead back to a theory of
> a speculative immediate determination of the value of the $?

I agree that there is a speculative element here. I
currently believe that the price level in the USA is likely
to rise by a few percent each year for quite some time, and
I act accordingly. If I -- and others -- believed that a
drastic deflation were imminent than we'd be more inclined
to hold money, which would contribute, in a self-fulfilling
manner, to deflation. If we believed that a drastic
inflation were imminent we'd be more inclined to "get rid
of" dollars, which would tend to drive prices up.

What, if anything "anchors" such speculation? At one time
it may have been the prospects for gold production. At
present, it seems to be central bank policy -- and, at one
remove, the factors that bear upon such policy. Thst is, in
forming an opinion on what's going to happen to prices next
year, I'm really forming an opinion on what the Fed is going
to do.

Do we differ?

Allin Cottrell.