Hannah Blog

December 6, 2012

Rationing dollars.

Filed under: another perspective,Economy — hannah @ 5:51 pm

Rationing prompts people to acquire more than they need. Does that also apply to money? Is the rationing of currency having the counter-productive effect of money hoarding? How else to explain the fact that as the quantity of money in circulation has increased, the rate at which it is exchanged has slowed to a trickle?

Of course, an increasing supply would seem to contradict that money is being rationed. But, an unequal distribution has the same effect. It isn’t necessary for everyone to be restricted for the tendency to hoard to be wide spread. There’s always the idea that “I might be next.”

So, when bankers speak of uncertainty, perhaps that’s their point of reference — the fear that their access to money will also be rationed, as, indeed, the Congress now threatens. Since Washington is the source of the dollar, to cut spending is to ration the availability of currency and then, like lemmings, everyone will follow suit.

Powered by WordPress