Hannah Blog

November 16, 2012

The Effect of Hoarding Money?

Filed under: another perspective,Hannah's views — hannah @ 5:22 pm

To what extent does a shortage of money in the economy, whether as a result of hoarding or artificial limits imposed by Congress, prompt individuals to demand more money for any transaction than they would if thought money were abundantly available? In other words, does hoarding inflate price demands irrespective of any functional or practical characteristics of the objects of trade and exchange. Does the artificial scarcity of money artificially increase the price of level?

For example, are prospective retirees less flexible in their expectation for capital gains because other sources of revenue are less secure?

It seems noteworthy that although the supply of money has gradually and steadily increased, the rate at which it circulates through the economy continues to decrease. It doesn’t make an difference how much money there is, if the velocity slows to a trickle.

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