>Money arises in exchange.
How? Money can't "arise" in exchange if it has to be there before the
exchange happens. New use-values have to be paid for 9in exchange) out of
existing monies. Credit is advanced before the use value is even created,
in many cases, on the expectation that new products and services will find
an adequate value to pay back the credit. Certainly there's an extension
of credit
>involved, but there has to be some real sector involvement or the
>money is going to be worthless. Central bank extensions of credit
>without any offsetting expansion in productive capacity will be
>inflationary. Sometimes that appears as a rising CPI; sometimes as a
>wacky stockmarket.
I agree but there seems to be a presumption among leftists that credit is unjustified and not offset by the real economy - smoke and mirrors. Although expansion in the money suply is inflationary, it seems to me that's necessary since even the most efficient economy is probably strongly deflationary without credit. Accumulation and inefficiency would inevitably pull the money supply and the supply of use-value out of balance. Since this would be especially true in a capitalist system, I think the monetarists are right to focus on maximizing the sustainable growth of the money supply. Otherwise, capitalist accumulation would be too great a yoke on the real economy.
Sometimes credit really is money for nothing. Most of the time and in the aggregate I think credit represents money for use-value that has gone begging for long periods of time before capitalists finally deigned to bring it to market. Silicon Valley may currently represent excess, but the easy credit environment there is probably the Valley's most important distinguishing feature. Keynes' formula for economic success really boils down to easy credit doesn't it ?