I sent the following follow-up message--just after the one on the same topics:

           From: "John Gelles" <indexed-savings@sbcglobal.net>
           To: <cyber-soc@topica.com>; "Talking Economics" <te-exchange@yahoogroups.com>
           Cc: "Cyberspace Society" <cyber-soc@topica.com>
           Sent: Thursday, March 10, 2005 5:09 PM
           Subject: What Backs Modern Money ?

In my previous message today on "Roots of Economics"
the main discussion was about "What Backs Modern Money ? ".

More needs to be said.

"What should be the Price ?"  is another way of asking "What
backs modern Money ?"

Price is supposed to relate the "cost of every asset for sale" to
the cost of every "other" asset for sale. The price of a pair of
shoes is supposed to reconcile the cost of shoes to the cost of
getting a haircut.

The difference between such costs and prices represents the
pricing power of the seller -- it reflects the potential windfall
profit "out there" when what is for sale is available in lesser
quantity than what buyers demand who are willing to pay
more than cost plus, say, a standard percentage of cost (for
defined industries or products).

Now auction markets do not compute an engineering cost
of the items auctioned. They reach a price that is convenient
for a single transaction. But the supply of necessities to a
nation is both an engineering and convenience problem.

This view of money and price highlights the difference
between money as a we know it (auction market money)
and "modern money" as it must be for full employment anti-
poverty budgeting (money engineered to reflect cost).

The answer to this conundrum is not local LETS trading
systems or scrip. The answer, if there is one, is national
law and international  treaty.

        Modern money needs to define prices high
        enough to sustain full employment of labor and
        full supply of needs and low enough to reflect
        engineering efficiencies.

John Gelles

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