Well, standard Austrian Theory maintains that there’s a time preference charater in every action, because time is scarce for non omnipotent human beigns. As a consequence, present means are more valuable then future ones… So far so good… I guess that the average Austrian would say, then, that the interest rate tends to vary directly with time preference - i.e, higher time preference, higher interest rates…
But when money comes into question, things get more thorny… We know that money is a present good, in a sense that its exchange services can be consumed by its owner without delay, if desired…My main doubt is: does people, when they cut consumption (save) and hoard their money, another present good (investment here is constant), emmit a time-preference judgment?
In a sense yes: for they could be using some of money’s services (buying goods) right now, instead of later. But money, being able to buy goods at any time, is also useful when hoarded as a “uncertainty insurance”, as Mises and Hoppe usually stress. And when people hoard, in my scenario with investment constant, they also emmit another time-preference judgment: they prefer cash now then later… So, it gets indetermined: consumption goods and money are present goods, but hoardings, as I understand them, show two time preference judgments.
Recently I read Prof Hullsmann’s article on Revista Procesos de Mercado, where he criticizes Rothbard’s theory of interest rate determination (proportion between consumption and future goods expenditures - investment) in the grounds that Austrians cannot this way mantain that time preferences determine the interest rate - it is then determined by consumptiion/investment ratio, with a loose link with time preference. I believe that if Hullsman is right, the great link between time preference, interest and capital in Austrian theory is weakened by a great extent.
I really would appreciate some help on this issue, and I hope I made myself clear…
