On Wed, 29 May 1996, Chai-on Lee wrote:
(among other things)
>
> But the fiscal policies of the state still establish a speculative value
> for its debt. One could argue, for example, that the market values the debt
> of the state just equal to its estimate of the future taxing power of the
> state.
>
> As I've explained above, through speculation on the future taxing power of
> the state.
>
>
>
> Chai-on:
> --------
>
> Is the value of the state debt seen as the value of the paper money unit
> in the above?
I take the paper money (or the reserves of the central bank) to be a part
of the state debt that happens to be financed at a zero interest rate. In
my view the "dollar" is the unit of account of the state debt.
>
>
> Duncan:
> Chai-on:
> --------
>
> I see. But the mechanism you mention in the above appeared to me as
> the same as the quantity theory of money. IMO, it was not a Marx-like
> expedition.
The point of view I'm proposing is quite different from the quantity
theory, since the value of the state debt (including the paper money)
depends not on it scarcity as in the quantity theory, but on the assets
that back it (including the future taxing power of the state), which seems
to me closer to the line of Tooke and Marx.
Yours,
Duncan