Re: Refuting supply-side economics

From: Andy F (aft627_at_aol.com)
Date: 09/28/04 

Date: 28 Sep 2004 02:41:58 GMT

William F Hummel wrote:

>
>On 27 Sep 2004 10:45:52 GMT, aft627@aol.com (Andy F) wrote:
>
>>William F Hummel wrote:
>
>>>The fact that the government has unlimited spending power in its own
>>>base money is a simple fact. But that doesn't imply it actually
>>>intends to do so or has done so. I'd be surprised if any economist
>>>ever believed that it did -- from which I conclude that you are not an
>>>economist, at least not one with a good understanding of monetary
>>>economics.
>>>
>>The government has unlimited power to issue bits of paper.
>
>Correct. But that does not imply the government would do so or even
>consider doing so. It is a simple statement of fact that too many
>policy makers misunderstand, just as they misunderstand the fact the
>government debt is not the same things as private debt.
>
>>But they don't have the power to buy unlimited goods and services.
>
>Goods and service and not unlimited, so the premise is invalid. I
>suspect what you mean is they don't have the power to buy all
>available goods and services because the producers would not be
>willing to sell them all.
>
>>If they try to issue too much paper, the paper becomes worthless.
>
>True, but this is not necessarily related to your second statement.
>Assuming the government continues to recapture all of its paper
>through taxes and bond sales, the paper will retain value.
>
>
When they sell bonds, it's not really recapturing paper, it's just exchanging
one sort of paper for another.If they try to issue too many bonds, the bonds
could become worthless.
  

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