From: gerald_a_levy (gerald_a_levy@MSN.COM)
Date: Wed Apr 30 2003 - 08:00:21 EDT
Re Paul C's (2nd) post on Tuesday, April 29: > This is not adequate Jerry. > The point I am making relates to the general phenomenon of > inflation, where state bank notes continue to function as money > but depreciate. I am not concerned with the rare situations in > which the currency becomes completely worthless - but the more > mundane phenomenon of monetary inflation. > A dollar is still accepted as a medium of exchange in the US > but it is worth significantly less than it was 30 years ago say. I didn't intend my reply to be an answer to all of the issues you raised previously -- only to the more limited question of "what validates the money issued by the state bank and or the credit system." I agree that it is not an adequate explanation for inflation or, for that matter, deflation. To explain inflation in the last 30 years (and the more recent wave of deflation experienced in many capitalist nations) we have to consider (among other issues) state macroeconomic policies including deficit spending, aggregate demand and the trade cycle, and international trade and currency exchange rates -- since inflation and deflation can not be comprehended only in terms of developments within an individual nation. But, I understand the spirit of your question to be that you want to address the 'simple case' first. Yet, if that is the case and you wish to discuss the relation between the quantity of value and the quantity of money, why not first discuss the even simpler case where there is a money commodity? In solidarity, Jerry PS: when are you leaving for the Havana conference?
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