[OPE-L:6449] Re: means of payment multiplier

Gerald Levy (glevy@pratt.edu)
Fri, 10 Apr 1998 09:48:38 -0400 (EDT)

Paul C wrote on Thu, 9 Apr:

> The volume of foreign exchange transactions per day amounts to about
> 70 times the daily international trade of the world.
> Clearly 'money' is here acting as a means of payment rather than as
> a medium of exchange.

I'm not really one of the (many) "money people" on the list, but isn't the
volume of foreign exchange transactions related to the *speculation* in

It would seem to me that when there is price instability, and the
possibility of devaluation or appreciation of national currencies, in one
nation within the world capitalist economy, then that fuels a speculative
drive. The more uncertain are changes in foreign exchange, the more
potential gain, or loss, for individual investors on that market.

> 1) think that I am right in assuming that the relationship must be
> non-linear?

I don't see any reason to believe that the dynamics of the foreign
exchange market are linear.

In so far as your second question is concerned, perhaps the distinction
between "esoteric" vs. "exoteric" (see Lipietz, 1985) might be useful in
terms of explaining this phenomenon as it occurs during different phases
of the cycle and as it relates to potential crises in individual nation

In solidarity, Jerry

Lipietz, Alain _The Enchanted World: Inflation, Credit and the World
Crisis_, London, Verso, 1985