[OPE-L:2115] Re: Re: The Money Supply

From: Michael J Williams (michael@williamsmj.screaming.net)
Date: Wed Jan 12 2000 - 10:33:01 EST

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> Re Chris's [OPE-L:2093]:
> > It is clear that at a time of hyper-inflation (a permanent possibility
> > with inconvertible paper - and NB only for paper) non-commodity money
> > fails in one of its most essential functions, namely to serve as means
> > of payment.
> ...
> > The reason for failure as means of payment is that such paper
> > fails as store; it cannot conserve value between sale and purchase of
> > commodities. Even today in some countries it is advisable to change
> > into goods as soon as you get it or place it in high interest accounts.

A 'monetized' commodity such as gold may then be a hedge against inflation -
but then so could any number of other commodities that might be expected to
hold their (monetary) value: works of art, real-estate, stamps, etc., as
well as some non-commodities such as a stable foreign currency. The notion
that gold is a safe store of value in inflationary times (even if itself
supportable) does thus not ground the notion that money must be gold, or any
other commodity.

> Jerry:
> Well, this must be another instance of a dispute within value-form theory
> since R/W in VFS don't have a commodity money theory and Mike W has argued
> against such a theory in the past on this list.

So Mike W is still arguing against the possibility of systemically grounding
the necessity of a commodity grounding for money.

Dr Michael Williams
Economics and Social Sciences
De Montfort University
Milton Keynes
fax: 0870 133 1147
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