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Hyper inflation destroys the value of monetary assets -for those of us on USS pensions the cap on inflation related upgradings (one of the great attractions of University pensions as they were) - indicates that actuaries just can't cope with the possibility of that since so much of the assets of pension funds are held as bonds. Only countries with control over their own currencies as the UK has since it didn't join the Euro - perhaps the one good thing Brown did while mismanaging the UK economy - can create money and it does change the terms of trade. So the UK pound has fallen against the Euro - good for UK manufacturing whilst we have access to European markets - but with some inflationary potential. German hyper inflation in the 20s was resolved by just issuing a new redenominated currency among other things but think how often this has happened - the French Franc, the Lira, the Zloty - with currencies changed to remove too many zeroes from the value specification on the notes. David Byrne ________________________________________ From: email list for Radical Statistics [[log in to unmask]] on behalf of John Whittington [[log in to unmask]] Sent: 08 September 2016 12:06 To: [log in to unmask] Subject: Re: "Corbynism after Corbyn" : Can JC arise from the dead?-- Corbyn's macro problem At 09:22 08/09/2016 +0100, John Bibby wrote: >You wrote: "...the government, being the monopoly issuer of the currency, >has no financial constraints on its spending .... ". But what ARE the >constraints then? I'd like to see this unpicked. In particular, the >constraints due to fear of inflation. As someone with no education in economics, I've often pondered that very basic question. I may be totally wrong, but it seems to me that it only becomes relevant in terms of international trade (both directions) and is, indeed, all about inflation (although that probably does not matter, per se, in the absence of international considerations). As I see it (quite probably wrongly!), within an 'isolated' country, currency is simply a convenient tokenisation of 'bartyring'. A country has finite resources, in terms of both physical resources and, more importantly, the available labour force. It doesn't really matter whether people are paid £10 per hour and have to pay £2.50 for a loaf of bread or whether they are paid £1000 per hour and have to pay £250 for the loaf - in either case the loaf costs them 15 minutes' income. Although we would call the latter 'inflation', I don't see that it matters (directly) within an 'isolated' country - but could well become an issue when one has to interact with the rest of the world. To me, the important issue is that, even within an isolated country, merely printing more currency does not, in itself, do anything the increase the resources - so, in the final analysis, if the resources are already being used optimally and appropriately, there ought to be nothing more that they could spend on anything, even if they printed a lot more currency. It may, of course, be possible to increase the effectiveness/efficiency of the resources (e.g. by education/training of the workforce), but I can't see that as being directly related to the currency supply. Things obviously happen transiently immediately after an increase in available currency, but I would think that a 'steady state' is probably usually achieved fairly quickly. Am I being naive and getting it all totally wrong? Kind Regards, John ---------------------------------------------------------------- Dr John Whittington, Voice: +44 (0) 1296 730225 Mediscience Services Fax: +44 (0) 1296 738893 Twyford Manor, Twyford, E-mail: [log in to unmask] Buckingham MK18 4EL, UK ---------------------------------------------------------------- ****************************************************** Please note that if you press the 'Reply' button your message will go only to the sender of this message. If you want to reply to the whole list, use your mailer's 'Reply-to-All' button to send your message automatically to [log in to unmask] Disclaimer: The messages sent to this list are the views of the sender and cannot be assumed to be representative of the range of views held by subscribers to the Radical Statistics Group. 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