From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Sat Nov 20 2004 - 09:44:33 EST
On Fri, 19 Nov 2004, Rakesh Bhandari wrote: > At 10:04 AM -0500 11/19/04, Fred Moseley wrote: > > > > > >I have the same question: what grounds do we have for supposing that > >the price/labor-time ratio for that particular basket of commodities > >determines the MELT? > > First, note that I am specifying a determinant for quantity of money > in circulation. For example, Greenspan will now drain liquidity from > the economy in order to bring the dollar price of the basket of > commodities down. So even within your own framework I have provided a > missing link--what determines the quantity of money. > > Second, the point is that Greenspan attempts to assure investors, > bond holders, those who personify accumulated wealth that the dollar > will always be as good as so much of this and that commodity. The > dollar understood that way it has an indirect value. Once the dollar > is understood that way, the MELT follows. Rakesh, Precisely how does the MELT follow? Determined by the ratio MV / L, or otherwise? Fred
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