Don’t hoard the Means of Exchange! (part 2)
Part 1 of this (short) series generated a major discussion and proved to be amazingly controversial. So before moving on to the intended next part, I’ll first clarify a number of items.
In the first place, there is a clear distinction to be made between wealth and money. People tend to mix these two, often subconsciously. They are not the same. So when an article is called ‘don’t hoard the means of exchange!’ it is not saying one is not entitled to generate and/or store wealth. Later we will see I’m not too impressed with wealth accumulation either, but still this is a very important distinction.
Secondly, people clearly have very strong feelings about their ‘rights’ when it comes to money. They focus solely on their individual ‘rights’, but they don’t understand that the money they hold is valuable because it is used by the other people in the community as a means of exchange. They have difficulty accepting that holding on the money (‘saving’) is damaging the interests of the other users of the means of exchange, which can’t use the money as long as it is held by the saver. By saving they are basically deflating the effective money supply, with all the problematic consequences that deflation entails.
Money basically is a public utility. Even when it is provided by market players. A part of the Common Wealth. It is provided to facilitate exchanges. When we make use of public space it is quite normal to expect responsible behavior, in line with the needs of other users of the space. We can expect a similar attitude when it comes to money.
Third, people joining the discussion ignored a key premise of the article: that money is primarily a means of exchange and not a store of value. The value of the money is result of the agreement to use it for trade, not for storing wealth. This shows how strongly held the prejudice is that money is necessary for savings, but still it is a wrong premise.
Fourth, I didn’t include alternatives to hoarding cash, but they are plenty. As I said previously, anybody fearing inflation has a very simple solution: buy some Gold. Or invest in your business, education, pay your suppliers up front, invest in cost cutting measures, things making you more independent from Transnational suppliers.
Fifth, another key issue is that of course in a sound monetary system nobody is going to send in the SQUAT teams to traumatize you and your loved ones if you hoard cash. The system must be designed in such a way it rewards ‘positive’ behavior. So saving will never be outlawed, it will just be made unattractive. Either by a demurrage, inflating the money supply or just by providing interest free credit based units: without interest on one’s holdings and with interest free credit available for all who need cash (as long as they have assets as collateral) saving money will not be a very attractive proposition anyway.
Many assumptions about money need a closer look. Strong emotions are involved when discussing these matters. But future non banker currencies will NOT be stores of value, but depreciating, rapidly circulating and cheap fiat units. Their success will not be measured by the mistaken notion of ‘price stability’, but by economic growth and wealth creation as opposed to wealth preservation. Preserving wealth can be done in many, much superior ways than hoarding the means of exchange.