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Old 1st February 2013, 06:59 PM   #281
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Originally Posted by psionl0 View Post
Whether the money exists or not, between the time it is taxed and the time the government spends it, the money is not circulating.
Pretty much, and I don't view it as completely separate to how things are currently done, just as a restatement of it.

It's only the difference between 1: revenue sending $tax to governments current account, and 2: revenue sending $tax to the fed (with the fed taking -$tax out of money stock), and the fed sending $tax to governments current account (adding +$tax to the money stock) when government needs it.

In an economic system where government can only raise revenue from taxes or money already in circulation (such as in a gold standard), '2' doesn't make sense, but in an economic system where government can fund spending through money creation, '2' does make sense, and that causes a redefining of the role of taxes.
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Old 2nd February 2013, 12:10 AM   #282
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Originally Posted by psionl0 View Post
Whether the money exists or not, between the time it is taxed and the time the government spends it, the money is not circulating.
Are you really sticking to that argument? Really? The US Government is sixteen trillion plus in debt, and growing, and you claim with a straight face that taxation removes money from circulation? The government spends every tax dollar almost as fast as it can get them. Claiming that any lag between Treasury receiving taxes and Treasury spending money is evidence that taxation reduces money from circulating is like arguing that the lag between my paycheck clearing and me spending money is evidence that I am reducing money from circulation. Ridiculous.

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That's the way it seems to work in Australia. If you get a social security or tax refund check, it is always written against the Reserve bank of Australia. Like the Fed, the RBA is neither a bank nor does it have reserves. Each reserve bank check is base money created on the spot. Taxation works in reverse.
If the RBA writes you a check for social security, that isn't taxation in reverse, that is taxation. The purchasing power for your social security was taken from every saver.

If your tax refund is written by the RBA, then savers are taxed in order to finance the refund, regardless of how you originally paid the tax.

What about all of this is so hard to understand?
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- Josiah Stamp

Last edited by Tippit; 2nd February 2013 at 12:15 AM.
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Old 2nd February 2013, 01:21 AM   #283
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Originally Posted by Tippit View Post
What about all of this is so hard to understand?
That's what I would ask you.

It's just a simple mathematical equation:
Total money in circulation = Existing money in circulation - Taxes + Government spending.

You don't appear to be able to differentiate between taxes and spending. Deficit spending might act effectively as a tax but the inflation tax is not the same as direct tax. One increases the money supply while the other reduces it.

Maybe you shouldn't use the term "inflation tax" if it confuses you like this.
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Old 2nd February 2013, 09:05 AM   #284
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Originally Posted by psionl0 View Post
That's what I would ask you.

It's just a simple mathematical equation:
Total money in circulation = Existing money in circulation - Taxes + Government spending.

You don't appear to be able to differentiate between taxes and spending. Deficit spending might act effectively as a tax but the inflation tax is not the same as direct tax. One increases the money supply while the other reduces it.

Maybe you shouldn't use the term "inflation tax" if it confuses you like this.
Are you trolling me? Differentiating between taxation and spending IS pointless. Apparently you, as well as Shambler, would have us believe that governments do not tax with the intention of spending. Governments levy taxes in order to spend. The assertion that because the Treasury might carry a cash balance (which in fact, is frequently negative) that taxation is reductive to the money supply is ludicrous. It is true that the inflation tax is different than direct taxes because of how the burden is applied. What isn't true, is the idea that the government somehow doesn't spend direct tax revenue, and/or this decreases the money supply.

The government spends, in one case, and spends in the other. You splitting hairs between the idea of direct taxation and spending, is a pointless strawman.

If I cash a paycheck and put the proceeds under the mattress with the intent of spending it soon, then according to your "logic" paying me would be reductive to the money supply. Please, I expect more out of you than weak trolls.
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Last edited by Tippit; 2nd February 2013 at 09:10 AM.
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Old 2nd February 2013, 09:43 AM   #285
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Originally Posted by Tippit View Post
Are you trolling me? Differentiating between taxation and spending IS pointless.
Rubbish! Taxation and spending are two separate things. Just because government taxation and spending both happen doesn't mean that you must not consider their individual contributions to the money supply.

Originally Posted by Tippit View Post
The government spends, in one case, and spends in the other. You splitting hairs between the idea of direct taxation and spending, is a pointless strawman.
You are conflating money with goods and services. Two ways that the government can appropriate goods and services from the public are to tax the public or print money. You have said so countless times. However, printing money increases the money supply while taxation doesn't (unless it doesn't cover spending but then we are back to printing money).

Originally Posted by Tippit View Post
If I cash a paycheck and put the proceeds under the mattress with the intent of spending it soon, then according to your "logic" paying me would be reductive to the money supply.
Exactly! Until you spend your cash, it is not circulating.

Last edited by psionl0; 2nd February 2013 at 09:45 AM.
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Old 2nd February 2013, 10:04 AM   #286
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Originally Posted by psionl0 View Post
Rubbish! Taxation and spending are two separate things. Just because government taxation and spending both happen doesn't mean that you must not consider their individual contributions to the money supply.

Really, psion? I didn't claim they're not two separate things. I claimed that differentiating between them is pointless.

Quote:

You are conflating money with goods and services. Two ways that the government can appropriate goods and services from the public are to tax the public or print money. You have said so countless times. However, printing money increases the money supply while taxation doesn't (unless it doesn't cover spending but then we are back to printing money).
Now you've changed your story from taxation reduces the money supply, to taxation doesn't increase the money supply. Which is it? In order to have an honest debate, it first helps to be honest.

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Exactly! Until you spend your cash, it is not circulating.
Lol. So by implication, every single economic transaction involving money has a reductive effect on the money supply. Congratulations, you now have as much credibility as Shambler.
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- Josiah Stamp

Last edited by Tippit; 2nd February 2013 at 10:07 AM.
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Old 2nd February 2013, 10:17 AM   #287
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Originally Posted by Tippit View Post
Really, psion? I didn't claim they're not two separate things. I claimed that differentiating between them is pointless.
You are saying they have the same effect on the money supply?

Originally Posted by Tippit View Post
Now you've changed your story from taxation reduces the money supply, to taxation doesn't increase the money supply. Which is it? In order to have an honest debate, it first helps to be honest.
Taxation reduces the money supply and expenditure increases it. Using taxation to fund expenditure does not change the money supply if they are in equal amounts. It's simple arithmetic.

Originally Posted by Tippit View Post
Lol. So by implication, every single economic transaction involving money has a reductive effect on the money supply. Congratulations, you now have as much credibility as Shambler.
So now you are claiming that "every single economic transaction" is synonymous with "If I cash a paycheck and put the proceeds under the mattress . . ."? Who is being dishonest here?

And if you think that withdrawing money and putting under the mattress leaves the same amount of money circulating then your calculator needs new batteries.
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Old 2nd February 2013, 11:47 AM   #288
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Originally Posted by Tippit View Post
Governments levy taxes in order to spend.
A government with the ability to create money doesn't need to tax in order to spend; therefore taxes have a different purpose, any guesses as to what?
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Old 2nd February 2013, 12:25 PM   #289
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Originally Posted by psionl0 View Post
You are saying they have the same effect on the money supply?

Taxation reduces the money supply and expenditure increases it. Using taxation to fund expenditure does not change the money supply if they are in equal amounts. It's simple arithmetic.
Right, congratulations on finally acknowledging what I've been saying all along. Using taxation to fund expenditure does not change the money supply. Increasing or decreasing the money supply changes the money supply. You have an odd, trollish way of submitting in agreement. No one other than a troll would attempt to make your distinction, because it's irrelevant. Taxation is done for the purpose of expenditure.

Quote:

So now you are claiming that "every single economic transaction" is synonymous with "If I cash a paycheck and put the proceeds under the mattress . . ."? Who is being dishonest here?
You are. You're the one who originally claimed, apparently in agreement with Shambler, that taxation reduces the money supply. Taxation reduces the money supply in exactly the same way that me cashing a paycheck does, which is to say, it doesn't at all. When the Treasury deposits its tax receipts with the Fed, Treasury still has that money, and it still intends to spend that money, sooner, rather than later. The money supply remains unchanged.

Quote:

And if you think that withdrawing money and putting under the mattress leaves the same amount of money circulating then your calculator needs new batteries.
Essentially, you're splitting hairs by claiming that every dollar bill outstanding that isn't involved in a transaction at any given time simply disappears, and that the government doesn't spend its tax receipts. Two outstandingly ridiculous assertions. Congratulations, once again.

You trolling me, bro?
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- Josiah Stamp

Last edited by Tippit; 2nd February 2013 at 12:27 PM.
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Old 2nd February 2013, 12:27 PM   #290
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Originally Posted by Shambler View Post
A government with the ability to create money doesn't need to tax in order to spend; therefore taxes have a different purpose, any guesses as to what?
No guesses necessary. The government wants to generate even more revenue than is tolerable via seigniorage. A government with the ability to create money doesn't need to tax in order to spend, because money creation is, in fact, a tax, in the same way that counterfeiting is theft. Therefore, direct taxes are also a tax. Therefore, you're mildly retarded.
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"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again... But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."
- Josiah Stamp

Last edited by Tippit; 2nd February 2013 at 01:14 PM.
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Old 2nd February 2013, 01:45 PM   #291
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Originally Posted by Tippit View Post
No guesses necessary. The government wants to generate even more revenue than is tolerable via seigniorage. A government with the ability to create money doesn't need to tax in order to spend, because money creation is, in fact, a tax, in the same way that counterfeiting is theft. Therefore, direct taxes are also a tax. Therefore, you're mildly retarded.
If spending through money creation is inherently inflationary, and causes inflation (as opposed to your idiotic 'tax' redefinition), does taxing an equivalent amount after spending, ameliorate that inflation?
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Old 2nd February 2013, 02:16 PM   #292
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Originally Posted by Shambler View Post
If spending through money creation is inherently inflationary, and causes inflation (as opposed to your idiotic 'tax' redefinition), does taxing an equivalent amount after spending, ameliorate that inflation?
Money creation is inherently inflationary, but doesn't necessarily cause inflation, because there are usually deflationary forces at work (technological progress, productivity gains, etc). This is coupled with a general failure of people like you to measure the overall impact on prices, because you willfully choose to ignore asset prices. However, it's still a tax, just like counterfeiting is still theft, regardless of what happens to the price level. My "idiotic" definition of taxation is simply the government depriving me of scarce resources, either by printing money and spending, or by taking my money from me and spending. Taxing an "equivalent amount after spending" simply means the government gets twice the tax revenue, of course. This is obvious.
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"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again... But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."
- Josiah Stamp

Last edited by Tippit; 2nd February 2013 at 02:24 PM.
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Old 2nd February 2013, 02:41 PM   #293
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Originally Posted by Tippit View Post
Money creation is inherently inflationary, but doesn't necessarily cause inflation, because there are usually deflationary forces at work (technological progress, productivity gains, etc). This is coupled with a general failure of people like you to measure the overall impact on prices, because you willfully choose to ignore asset prices. However, it's still a tax, just like counterfeiting is still theft, regardless of what happens to the price level. My "idiotic" definition of taxation is simply the government depriving me of scarce resources, either by printing money and spending, or by taking my money from me and spending. Taxing an "equivalent amount after spending" simply means the government gets twice the tax revenue, of course. This is obvious.
So you're saying that if instead of $tax going to governments current account, $tax goes to the fed (causing -$tax from the money stock) and government spending through money creation at the same rate (causing +$tax addition to the money stock), government suddenly gets 2 * $tax in taxes?

That is a delusional misunderstanding of basic mathematics.
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Old 2nd February 2013, 03:06 PM   #294
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Originally Posted by Shambler View Post
So you're saying that if instead of $tax going to governments current account, $tax goes to the fed (causing -$tax from the money stock) and government spending through money creation at the same rate (causing +$tax addition to the money stock), government suddenly gets 2 * $tax in taxes?

That is a delusional misunderstanding of basic mathematics.
The Fed doesn't destroy the federal government's tax revenue, genius, the federal government spends it. This is in addition to the proceeds gained from debt monetization by the Fed, as well as that borrowed from other private and central banks around the world. That's how the US government managed to spend $3.8 trillion with direct tax revenue of only $2.4 trillion. They borrowed and/or printed the $1.4 trillion dollar balance. The Fed bought as much as 80% of newly issued debt by the Treasury in 2012, picking up the slack from our dwindling foreign creditors.

No one here is delusional, you're merely wrong, and trying to sell an agenda that no one is buying.
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- Josiah Stamp
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Old 2nd February 2013, 03:18 PM   #295
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Originally Posted by Tippit View Post
The Fed doesn't destroy the federal government's tax revenue, genius, the federal government spends it. This is in addition to the proceeds gained from debt monetization by the Fed, as well as that borrowed from other private and central banks around the world. That's how the US government managed to spend $3.8 trillion with direct tax revenue of only $2.4 trillion. They borrowed and/or printed the $1.4 trillion dollar balance. The Fed bought as much as 80% of newly issued debt by the Treasury in 2012, picking up the slack from our dwindling foreign creditors.

No one here is delusional, you're merely wrong, and trying to sell an agenda that no one is buying.
You're trying to sidestep my entire post; you said that if $tax from revenue goes to the fed and then is removed from the money stock (so that's -$tax from the money stock), and government later spends $tax through money creation (adding $tax back onto the money stock), then somehow government ends up with 2 * $tax.

How, exactly, does that happen?
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Old 2nd February 2013, 03:23 PM   #296
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Originally Posted by Shambler View Post
You're trying to sidestep my entire post; you said that if $tax from revenue goes to the fed and then is removed from the money stock (so that's -$tax from the money stock), and government later spends $tax through money creation (adding $tax back onto the money stock), then somehow government ends up with 2 * $tax.

How, exactly, does that happen?
I sidestepped your ridiculous hypothetical, because it is ridiculous. The Fed doesn't destroy the Treasury's money, the US Government spends it like a drunken sailor. If you want to talk about silly hypotheticals, I suggest possibly making another thread so that I don't waste my time. If you want to talk about the real world, then go right ahead. In the real world, the Fed doesn't destroy the US Treasury's money.

In the case of your bizarre hypothetical, then no, the government would not end up with 2x the tax revenue.
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- Josiah Stamp
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Old 2nd February 2013, 04:22 PM   #297
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Originally Posted by Tippit View Post
I sidestepped your ridiculous hypothetical, because it is ridiculous. The Fed doesn't destroy the Treasury's money, the US Government spends it like a drunken sailor. If you want to talk about silly hypotheticals, I suggest possibly making another thread so that I don't waste my time. If you want to talk about the real world, then go right ahead. In the real world, the Fed doesn't destroy the US Treasury's money.

In the case of your bizarre hypothetical, then no, the government would not end up with 2x the tax revenue.
So seeing as you've now just contradicted your answer to this previous question, I'll present it again:
If spending through money creation is inherently inflationary, and causes inflation, does taxing an equivalent amount after spending, ameliorate that inflation?
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Old 2nd February 2013, 07:10 PM   #298
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Originally Posted by Shambler View Post
So seeing as you've now just contradicted your answer to this previous question, I'll present it again:
If spending through money creation is inherently inflationary, and causes inflation, does taxing an equivalent amount after spending, ameliorate that inflation?
Lol, No. First of all, you apparently lack the reading comprehension to understand what I wrote above. I said that money creation is inflationary, but that doesn't necessarily result in the "general price level" rising, because there can be offsetting deflationary factors, or the money can simply lead to a series of financial asset bubbles.

Second, inflating the money supply causes me to pay more for things than I otherwise would have absent the new money, regardless of whether the price level goes up or down. So taxing me more doesn't "ameliorate" that, it just results in yet another tax. If the government were to actually destroy the tax revenue, as opposed to spending it, it *would* serve as a deflationary offsetting factor, but this doesn't happen outside of silly hypotheticals on the internet.

The Federal Reserve hasn't had a tight monetary policy for a very long time, and the US Treasury isn't in the habit of destroying tax revenues.
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- Josiah Stamp
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Old 2nd February 2013, 07:20 PM   #299
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Originally Posted by Shambler View Post
It's only the difference between 1: revenue sending $tax to governments current account, and 2: revenue sending $tax to the fed (with the fed taking -$tax out of money stock), and the fed sending $tax to governments current account (adding +$tax to the money stock) when government needs it.
If you are not consistent with your definition of "money stock" then you will get yourself tied up in knots the same way that Tippit did.

"Money stock" or "money supply" or "money in circulation" all basically mean money that the public has direct access to. Therefore, vault cash in depository institutions, bank reserve accounts with the Fed and money held by the government are not generally counted in the definitions of M0, M1 M2 money etc. Whether tax receipts are held by the fed or in a current account at the treasury, it is still held by the government and not in the hands of the public.

Originally Posted by Shambler View Post
In an economic system where government can only raise revenue from taxes or money already in circulation (such as in a gold standard), '2' doesn't make sense, but in an economic system where government can fund spending through money creation, '2' does make sense, and that causes a redefining of the role of taxes.
2 can still make sense under a gold standard if the government is sitting on a stock of gold. Releasing some of that stock would increase the amount of gold in circulation. The difference is that the government could not run deficit budgets indefinitely or it would run out of gold.

Of course, ever since token money (essentially IOUs) came into existence many centuries ago, debasing gold has been as simple as printing more money and there has always been more government issued money than there has been gold to back it up. Carried too far, this policy could cause a run on gold stocks and collapse the currency. That is why Richard Nixon abandoned gold in 1970.

Under a pure fiat standard, governments can run unfunded deficits indefinitely (printing money) but for it to be non-inflationary, it must be result in a corresponding increase in the amount of goods and services being produced and you have yet to convince me that the government can ensure this. (I'm assuming that the fractional reserve system has been taken care of ).
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Old 2nd February 2013, 08:12 PM   #300
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Originally Posted by Tippit View Post
..If the government were to actually destroy the tax revenue, as opposed to spending it, it *would* serve as a deflationary offsetting factor...
Finally. There. Now you understand that taxes, in a system where government funds spending through money creation, play a role in managing inflation.
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Old 2nd February 2013, 08:29 PM   #301
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Originally Posted by Shambler View Post
Finally. There. Now you understand that taxes, in a system where government funds spending through money creation, play a role in managing inflation.
Wanna bet?
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Old 2nd February 2013, 08:43 PM   #302
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Originally Posted by Shambler View Post
Finally. There. Now you understand that taxes, in a system where government funds spending through money creation, play a role in managing inflation.
So, in a hypothetical world that doesn't exist, where Treasury destroys enough tax revenue to offset money printing, taxation would "manage" inflation. Sure, ok. Meanwhile, in the real world, where government spends every penny it can get its hands on, and then spends some more, there is taxation, and more taxation.
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"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again... But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."
- Josiah Stamp

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Old 2nd February 2013, 08:45 PM   #303
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Originally Posted by psionl0 View Post
If you are not consistent with your definition of "money stock" then you will get yourself tied up in knots the same way that Tippit did.

"Money stock" or "money supply" or "money in circulation" all basically mean money that the public has direct access to. Therefore, vault cash in depository institutions, bank reserve accounts with the Fed and money held by the government are not generally counted in the definitions of M0, M1 M2 money etc. Whether tax receipts are held by the fed or in a current account at the treasury, it is still held by the government and not in the hands of the public.
Ah, well I take it to mean the money stock as written on the feds balance sheet, which would include that held by government.

You're right though, that there is a fair bit of room for ambiguity, when talking about government spending and issuing money to government from the fed, since that is different to common definitions/measures of the money supply.

Originally Posted by psionl0 View Post
2 can still make sense under a gold standard if the government is sitting on a stock of gold. Releasing some of that stock would increase the amount of gold in circulation. The difference is that the government could not run deficit budgets indefinitely or it would run out of gold.

Of course, ever since token money (essentially IOUs) came into existence many centuries ago, debasing gold has been as simple as printing more money and there has always been more government issued money than there has been gold to back it up. Carried too far, this policy could cause a run on gold stocks and collapse the currency. That is why Richard Nixon abandoned gold in 1970.

Under a pure fiat standard, governments can run unfunded deficits indefinitely (printing money) but for it to be non-inflationary, it must be result in a corresponding increase in the amount of goods and services being produced and you have yet to convince me that the government can ensure this. (I'm assuming that the fractional reserve system has been taken care of ).
True, yes; 2 would make sense under a gold standard, so long as there was gold available.

The policies I put forward in the thread here, are mainly about closing the output gap so that the economy can be brought back to full productivity and full employment; it will be possible to provide full employment, with a corresponding increase in output/goods/services, so long as there are no resources in scare supply, which can't be replaced with other resources in more abundance (such as e.g. slowly replacing oil with other power sources like renewable/nuclear).

Today, economic problems are all discussed in terms of availability of money and how to fund things, but with the policies in this thread (which discard the taboo over money creation), it becomes solely about efficient resource management, because there will always be money available for funding, and the primary source of inflation will be resource bottlenecks (limited/scare resource supplies, which includes labour).

Government wouldn't be centrally planning resources either (except those publicly owned), in the end private markets would; the job guarantee would be a purely temporary program, for injecting money into the private economy (to get that back up to speed), while still getting actual productive use out of the money while at it (through the effort people put in working in the job guarantee), with all workers going back to private industry in the end.

Government just has to make an effort to avoid directing that job guarantee money into areas where there are resource/supply bottlenecks, which private industry (to an extent) also has to avoid once they hold all that extra money (and where private industry may direct money towards resources of limited supply, government can use taxes and other mechanisms, to discourage that and control inflation from that, if need be; that's an even more in-depth discussion though).

Originally Posted by psionl0 View Post
Wanna bet?
I gladly would, if there would be any country that would implement these policies to test that out.

Last edited by Shambler; 2nd February 2013 at 08:46 PM.
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Old 3rd February 2013, 12:27 PM   #304
Shambler
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Just looking at this article again, and its explanation of an alternative calculation of general price inflation (which gets a little complicated).

It does a good job of separating the short-term relationship between the money supply (which is endogenous) and inflation, and it reframes inflation in terms of wages and corporate profits (which makes a lot of sense), and this is something that is affected by aggregate demand (or lack of) and savings.

It's a much more robust short-term determination of what leads to inflation, which implies a much wider toolset of inflation management policies, and a much wider ability to undertake spending before inflation threatens.
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