Re: (OPE-L) Re: on money substance and abstract labor

From: Allin Cottrell (
Date: Wed Jun 23 2004 - 14:46:31 EDT

On Wed, 23 Jun 2004, Rakesh Bhandari wrote:

> At 9:57 PM -0400 6/21/04, Allin Cottrell wrote:
>> What are the consequences if G'span omits to do what, exactly?  If he
>> omits to consider the price of gold as such, nothing.
> Well the argument is about whether the commodity basis of money has
> been transcended. My point is that non convertible money or even
> irrelevance of gold does not prove that said basis has in fact been
> abolished.

Your point is not made by the observation that those reponsible for
managing the money supply pay attention to the price level when making
their decisions.  That is a commonplace, and has nothing to do with
whether "the commodity basis of money has been transcended".

>>   If he's willing
>> to let inflation rip in the U.S. (say, monetizing Bush's deficits)
>> there may be consequences.
> Well he seems to have accomodated federal spending.

He has held interest rates quite low, but the degree of monetization
of the federal deficit has been fairly modest:

Year   Federal Deficit ($b)  Increase in M1 ($b)
2002      240.0                  37.8
2003      414.5                  78.0


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