Terry McDonough wrote: > Does no one else see any merit in the chartalist approach to money which > argues that money is anything the state deems acceptable in payment of taxes.<
I think that the chartalist idea makes a lot of sense. But the key issue is whether or not the money is scarce. By accepting fiat money (not my term, by the way) in payment of taxes, that insures there's a regular source of demand for it. But I'm sure that the Zimbabwean government accepts its fiat money in payment of taxes at the same time it's quickly losing its scarcity-value. By the way, that case suggests a limitation of the chartalist perspective (though perhaps I don't understand it well enough): it's not enough for the government to accept the tokens in payment of taxes. People have to be willing to pay taxes. In a civil-war type situation (or where the government is in war with most of the rest of society), it's possible that the government can't get people to pay enough taxes (and payments to its supporters can't be cut), so that its deficit can't be abolished. The government (state) actually has to have enough political power to force the circulation of paper money. If it doesn't have that power, the chartalist theory can't work. I think it was Randy Wray who summarized the chartalist theory as saying that money is like a claim check you get when you leave a coat at the front desk at a restaurant. It won't keep you dry in the rain and snow, but it can buy your coat back, based on the restaurant's control over it (and its contract to return the coat). But if you can easily steal the coat back (or someone else can), then the token becomes worthless. State power is key. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
