It does guard against uncertainty, for money can be exchanged against any good by definition.
You keep saying this, where is proof?
“A need for ‘security’ can’t be fulfilled by just holding more cash.”
I agree that it cannot perhaps bring total fulfillment, just as the need for happiness can never be entirely fulfilled by more wealth and evermore “things” [material goods]. Just like anything else, for some it will provide more fulfillment than for others.
Nevertheless, it [i.e. holding/saving more cash instead of spending it] is what many people often do when striving for the perhaps unachievable goal of feeling more secure under certain economic conditions - no differently than they strive for the ever more [or even perfect] happiness by attempting to accumulate ever more material possessions. They can never reach a state of a feeling of perfect security, or of perfect happiness through perpetually having more “stuff”- however that does not stop many from striving towards both of those ultimately unattainable goals.
"Depending on context ‘hoarding’ cash can be completely useless whereas hoarding real goods can save your life. "
True, but I never suggested that holding cash was/is considered a cure-all for all economic conditions [no more than gold ,silver, bonds, or even wampum beads , can be].
For example, under hyperinflation conditions [i.e super fast currency depreciation ] , most attempt to exchange their rapidly depreciating currency for real goods, or go to direct barter, forgoing exchange of the medium of exchange altogether.
In such a scenario you could say that the demand to hold cash has fallen to practically zero- however people still strive for the feeling of greater security merely by the act of going to direct barter in that scenario- because they generally believe [and rightly so] that they are better off [safer, more secure] with tangible goods and without actual cash under that particular economic scenario [hyperinflation], despite the fact that almost no one says to themselves “uh,oh! hyperinflation- better ditch the cash and go to direct barter whenever possible”- these actions occur as a natural re-action to prevailing economic conditions and the constant individual need to feel safer and more secure , particularly in the short term.
Are you kidding ?? It’s a baseless assertion. Where’s the proof that it’s correct ?
I never suggested that you suggested that. What I suggest is that you’re muddying the waters.
Yes, under ANY amount of inflation, holding cash or using cash that loses its value doesn’t sound very sensible. However inflationists seem to believe that there’s some sort of ‘demand for money’ that they are called to fulfill, by, guess what ? printing more token money. So they bring up this ‘demand for money’ stuff as justification but the justification is fallacious.
This is not at all answering the question…
let me try again…
What do you call money that is not destined for “to hold, hoard, save, not spend”, that is in effect to be spent?
When a firm hires employees and has an increased physical cash need, or as I keep calling it a demand for money, to pay them, what is that called if it is not a demand for money? I am not looking to make up “some fancy sounding esoteric “economic” name”, I would like to know what the term is, or is it some concept that has no name?
A firm usually produces stuff which people buy and pay for using money. That’s how a firm gets ‘physical cash’ to pay its employees.
Not what I was asking, I know this…
I know my reply sounded rather silly, but the point is that if the amount of money available for all transactions was somehow fixed there wouldn’t be any real problem. There’s no demand for ‘new’ money to pay employees or any other thing. Prices would simply change to reflect new conditions.
If the amount of cars, or phones, or…, was fixed then an increase in the amount of car users, or phone users would lead to a shortage of cars or phones or whatever. In the case of money however, prices can simply reach a new equilibrium without any ‘shortage’ of money really happening.
Ok, that is fine, regardless of injection of new money into the system, what is it called when the firm has an increased demand for capital…
What is the term used for this, I called it demand for money, was this wrong, if so, what do we call this?
“What do you call money that is not destined for “to hold, hoard, save, not spend”, that is in effect to be spent?”
I have no idea.
Apparently it cannot fit into Juan’s thin skull that dollars, gold coins coins or whatever are goods too, and as such there is a demand for them like any other good.
Can you help me out, am I right or wrong? When I business needs more of something, for what ever reason it is demand, in this case, when they need money, would it not be a demand for money?
I suggest you don’t pay attention to scineram. He doesn’t know what he’s talking about. Why don’t you check JAlanKatz attempt at pushing the same sophism in this thread a couple of days ago ? His talking about supply and demand curves for money was shown to be wrong.
Apparentey the difference between commodity money and token money is too subtle for some people to grasp…
Fair enough, I am digging for information, can you answer this question?
Can you help me out, am I right or wrong? When I business needs more of something, for what ever reason it is demand, in this case, when they need money, would it not be a demand for money?
I think commodity based or token based money would be irrelevent to the term…
You’re correct. That is the premise of George Selgin’s work on coinage.
If you want to call it so…I guess that in a narrow sense you’d be correct. But on the other hand…
If you buy a pound of potatoes for $1, you can say that you are ‘demanding’ 1 pound of potatoes and the grocery owner is demanding 1 dollar.
You could sum all the sales of potatoes in a day and say : the demand for potatoes today was 1000 pounds and the demand for dollars to pay for those potatoes was $1000. Does that means there’s an abstract demand for money of $1000 and that $1000 need to be produced the same way the potatoes were produced ? Of course not.
So, what do you think is the meaning of the ‘demand-for-money’ concept ? What purpose does it serve in economic analysis ?
But coinage is just shaping a commodity which already has a per weight price. It’s no different than manufacturing screws.
Basically, since the shopkeeper may not need a commodity at the moment, what he will desire, is a stable medium of exchange, if he sells 1000 lbs of potatoes for 1000 bushels of wheat, what happens when his supplier of potatoe does not want wheat, with a medium of exchange that is not a commodity itself, though it can represent an amount of one or not, offers an additional benefit of utility.
I am not saying that the money needs to be produced on the spot for the example, what this draws back to and I appologize for the sidetrack, is that when money is injected into a system, when it hits the business first it balances the inflationary effect faster, that the initial price deflation from the increase of production reaches equilibrium when the increased medium of exchange finally reaches the store in the demand for more potatoes…
A owns a potato farm, B owns a store, C is an unemployed worker
Giving the money to C (US Stimulus or welfare), inflates the price because the increase in the demand for potatoes, C has no incentive to work, so inflation does not become deflated to equilibrium
Giving the money to B, inflates the price from A to B, which in turn inflates it to any consumer, A expands and employs C, increasing production, and deflating the price to equilibrium
Giving the money to A, deflates the price of the raw material potato as A expands, hiring C, the deflated price is benefitting B which benefits all consumers, when C comes around to buy potatoes, the demand is increased, the price inflates back to equilibrium
This is not saying adding more medium of exchange (money) into the system is ever good, but the logic that if it were to happen it should happen to benefit production (raw materials) and therefore lead to equilibrium faster…
Can you give me a link, or a title?