[p2p-research] excellent contribution on flow money by Martien van Steenbergen

[Martien van Steenbergen]

Hi Dmytri,

Following your path from Henry George, I came to understand my  
confusion:

RENT
Confusingly, rent has two different meanings for economists. The first  
is the commonplace definition: the INCOME from hiring out LAND or  
other durable goods. The second, also known as economic rent, is a  
measure of MARKET POWER: the difference between what a FACTOR OF  
PRODUCTION is paid and how much it would need to be paid to remain in  
its current use. A soccer star may be paid $50,000 a week to play for  
his team when he would be willing to turn out for only $10,000, so his  
economic rent is $40,000 a week. In PERFECT COMPETITION, there are no  
economic rents, as new FIRMS enter a market and compete until PRICES  
fall and all rent is eliminated. Reducing rent does not change  
production decisions, so economic rent can be taxed without any  
adverse impact on the real economy, assuming that it really is rent.
http://www.economist.com/research/Economics/alphabetic.cfm?LETTER=R#rent


The only definition I used was:

Renting, a system of payment for the temporary (time factor) use of  
something owned by someone else; the payments for such use are  
typically referred to as "rent".

So, your remark cleared things up considerably. Thank you for that.

Succes en plezier,

Martien.

On 31 May 2009, at 22:19 , Dmytri Kleiner wrote:

>
> On Sun, 31 May 2009 21:31:54 +0200, Martien van Steenbergen
> <Martien at aardrock.com> wrote:
>> Thanks for clearing this up Dmytri. I didn't know this (i.e. the  
>> first
>> part of your explanation). I'll read it a couple of times, because I
>> don't grasp it al yet.
>
> This Georgist cartoon is a good simple starting point:
>
> http://www.henrygeorge.org/rent1.htm
>
>> You say:
>>
>>> Thus the most significant component of the price of borrowing  
>>> money is
>>> Rent, and the solution is to eliminate artificial scarcity.
>>> Demmurage and
>>> mutual credit are two ways that this is attempted, the former by
>>> encouraging circulation (velocity) through negative interest, the
>>> later
>>> by allowing currency to be created by all participants.
>>
>> I'm confused. How does demurrage solve artificial scarcity?
>
> Demurrage attempts to solve artificial scarcity by discouraging  
> hoarding,
> since money _loses_ money with time, the holder has a strong  
> motivation to
> pass it on. "Supply" of money is a function the volume of currency and
> circulation, so any increase in volume or circulation will increase  
> supply.
> That is the same motivation as when central banks lower interest  
> rates to
> attempt to stimulate the economy.
>
>
> Cheers.
>
>
> -- 
> Dmytri Kleiner
> editing text files since 1981
>
> http://www.telekommunisten.net
>
>

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