Re: Seigniorage, Who, What, Why

From: Bill Ryan (william_b_ryan_at_hotmail.com)
Date: 08/16/04 

Date: 16 Aug 2004 10:33:13 -0700

That's not quite what I said: I said, "I use the
term 'State' to represent the entire Federal
structure, including the three branches of government
AND the Federal Reserve, which operates under rules
set by Congress."

In other words, one can refer to the State as
represented by whatever agency, branch, or department
is responsible. That includes the Fed as well as the
Treasury.
-------------------------------
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[Reply] It is necessary to use this odd-ball
definition of the "State" to sustain Mosler's "State
Theory of Money." Try running the definition by,
say, a professor in the political science department.
Or perhaps even the history department. Or just open
a dictionary.
-

>Taxes are however paid to
>the U. S. Government, not the Fed.

Almost correct. Taxes are paid to the United States
Treasury, not the U.S. Government.
-------------------------------
--------------------
[Reply] Actually, most people address their checks
to the Internal Revenue Service, not Treasury. What
a ridiculously trivial argument. Functionally, the
Federal Reserve System is a member of the financial
sector--whether or not the Federal Reserve *Board* is
an intrument of public oversight. Taxes are not paid
to - repeat - repeat - repeat - the Federal Reserve.

The form in which taxes are generally paid is Federal
Reserve *Bank* credit, not fiat money spent into
circulation by government. The fact that government
accepts Federal Reserve Bank credit along with
commercial bank credit simply puts government in the
same league as the private sector, since it too
accepts Federal Reserve Bank credit and commercial
bank credit in trade. It is this acceptability to
all sectors that gives it its value.

The government could in theory intrude on this
creditary process by printing and spending money into
circulation, which it will accept in taxes.

That would put government in direct conflict with the
banking system.

Been there. Done that. Or tried to, at any rate.

The banks refused to accept Lincoln's Civil War
"greenbacks" for deposit or in payment for debt,
despite the legal tender law. They quickly fell into
the hands of speculators at pennies on the dollar.
The speculators were mostly the same people as the
bankers.

Twice, the U. S. Supreme Court upheld the government.
The banks ignored the Supreme Court.

The matter was eventually resolved in complete
victory for the banks with the enactment of the
Specie Resumption Act of 1875 during Grant's
Republican administration, redeeming the greenbacks
at full face value in gold, greatly enriching the
speculators. Making them ex-post facto equivalent to
gold coins. Something far different than fiat money.

The "State Theory of Money" is relevant only to a
hypothetical monetary system that does not exist.

The concept of "seigniorage" is completely
meaningless in the context of modern creditary money.
-

I said taxes are paid to the "State", which is
correct since the Treasury is the responsible
department. Ryan, trying to make a case, would have
you believe I said taxes are paid to the Fed. I'll
give him the benefit of the doubt and assume his
mistake was only due to a reading comprehension
problem.
-------------------------------
--------------------
[Reply] Then why not say taxes are paid to the
government, not the "State." The reason he say's the
"State" is to fallaciously make the case for Mosler's
"State Theory of Money." Hummel's problem is that I
comprehend quite well, so his (Mosler's) fraud is
obvious to me.
-

The IRS accepts payment by check ONLY if the payer's
account has sufficient funds. The payment is made
when the check clears. Clearing means a transfer of
Fed liabilities from the payer's bank to payee's
bank.
-------------------------------
--------------------
[Reply] Exactly the same for anybody receiving
payment by check. No support for Mosler's "State
Theory" here.
-

A check is not legal tender. It is merely an order
to transfer Fed liabilities from the payer's bank to
the payee's bank. Ryan claims it is wrong to say
that the IRS only accepts Fed liabilities in payment
taxes, because he observes that it also accepts
checks.
-------------------------------
--------------------
[Reply] The argument is that the IRS accepts
commercial bank credit in the payment of taxes, as
does practically every recipient of payments in the
economy, the most notable exception being drug
dealers. Another exception are international
currency dealers, like Mosler. Which certainly must
influence his thinking.

A check is not an "order to transfer Fed liabilities
from the payer's bank to the payee's bank." It is an
order to pay the payee. Whether or not funds are
transferred from one bank to another is a matter of
interbank settlement.
-

William F Hummel <wfhummel@comcast.net> wrote in message news:<29e0i0p03t2mt0pl2pbh7bdf8kuq238btn@4ax.com>...
> On 15 Aug 2004 19:13:05 -0700, william_b_ryan@hotmail.com (Bill Ryan)
[snipped]

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