Re: Debtor Nation, another view

"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
news:2u45l1l7ge8ueu07rn5k3ld5246q48rais@xxxxxxxxxx
> On 16 Oct 2005 10:46:31 -0700, "ruetheday@xxxxxxxxxx"
> <ruetheday@xxxxxxxxxx> wrote:
>
> Hummel said:
>>>I asserted in simple terms that borrowing alone will not assure the
>>>scarcity of a fiat currency. I claim that taxes are a necessary
>>>condition for that purpose. Now if you can show how a fiat currency
>>>can retain value without taxes, please do so and explain how.
>>>Otherwise it should be evident (even to you) that taxes are ultimately
>>>what a fiat currency depends on to give it value on a continuing
>>>basis.
>>
>>>For those unfamiliar with the subject, this is the basic tenet of the
>>>chartalist theory of money, sometimes called the Knapp's "state theory
>>>of money."
>>
>>All that is necessary for something to have value as money is that it
>>is scarce and that other parties are willing to accept it as payment.
>
> Exactly so. But what you have failed to explain is: what is required
> to ensure that other parties are willing to accept it as payment?
>
> We are not talking about commodity money, something that went out of
> use several decades ago. We are talking specifically about fiat
> currency which is government-issued and inconvertible into any other
> form of money or valuable commodity. All industrial nations now only
> issue fiat money for their monetary base, which is the basis for all
> credit issued within the private sector.
>
>>Those other parties can be the government (as in the case of taxation)
>>or they can be private individuals and firms willing to accept the
>>money as payment for goods and services. There is nothing peculiar
>>about taxation with regard to the value of money.
>
> So I'll repeat the challenge. Show how a government's fiat currency
> can retain value for long without taxes.

That is not a difficult challenge, but Rue seems to be looking
the other way or something. The currency will retain its value
and it will actually increase in value if the government absolutely
prevents counterfeiting and if the government does not issue
any more money. This absolute control on the amount of money
in the system will satisfy the scarcity aspect while the "legal
tender" decree of government assures that this fiat money is
the medium of exchange. And this may, in fact, show us how
signorage can actually be used to fund government if the
economy is _actually_ expanding. i.e. it is possible to place
more money into the system without destroying the value
of the existing money if the system itself is expanding.
Government gets first use of the money as it spends it
into existence. But in this scenario there is no need for
any IOU's or any interest.

Well, Hummel, you asked for a way to do it without
taxation and I gave it to you. I do not claim that this
is the best way to do things, but it is A WAY.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org


.

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