Re: General Theory Seminar --Savings and Investment

["John O'Donnell" <jackodonnell@xxxxxxxx>]

Paul Davidson wrote:

<<SNIP>>

> Other than money -- in a law abiding society where production and exchange
> is organized by money contracts. enforceable under the civil law of
> contracts, money is the most liquid of all assets.  All other assets
> possession  of liquidity compared to money is relative -- and expressed by
> the liquidity premium one has to pay to get someone to give up money for
> the aforesaid asset.

This is tautologically true when money is maintained at a
reasonably stable value provided the stability is sufficient to
allow holding money long enough to reach the next transaction
without any serious infliction of loss. Lacking that feature
may, of course, be ignored by making the frivolous excuse that
under such circumstances nominal money ceases to be money.

However, with hyperinflation or its opposite [Yet to be seen?]
hyperdeflation, the question of liquidity becomes a bit suspect.
Liquidity during a hyperinflation is suspect because people
can't get rid of it fast enough to contain losses and if there
ever is a hyperdeflation because people would hold onto money as
long as possible making it unavailable for trade.

<<SNIP>>
--
			-- jbod

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