Re: saving and finance and an answer to Basil Moore

["David Dequech" <dequech@xxxxxxxxxxxxxx>]

Dear Ed, Paul and others,
I would like to add (and, if my memory serves me well, Keynes also notes, in
chapter 13 of the GT) that the second decision refers to an individual's
whole wealth, and not only to the part of this wealth that increased as a
result of saving. In other words, the individual has to decide in what form
he/she will keep his/her whole wealth. In particular, he/she has to decide
whether to continue keeping part of that wealth in the form of money.
This monetary part of the stock of wealth is sometimes called savings (by
Keynes himself and others), but it should not confused with saving (without
the s). Savings is (part of) a stock, while saving is a flow.
Cheers,
David

-----Original Message-----
From: Paul Davidson <pdavidson@xxxxxxx>
To: Edward J. McKenna <ejmck@xxxxxxxxxxxx>
Cc: pkt@xxxxxxxxxxxxxxxx <pkt@xxxxxxxxxxxxxxxx>
Date: Sexta-feira, 18 de Abril de 2003 12:07
Subject: Re: saving and finance and an answer to Basil Moore


Paul wrote:

>No !. The decision of how much of one's income to consume is the first
>decision. As long as the average propensity to consume is less than unity--
>this first decision will leave the household with a RESIDUAL sum of funds
>that is equal to nonconsumption.  THIS FIRST DECISION IS WHAT CLASSICAL
>ECONOMISTS CALL THE TIME PREFERENCE DECISION because it involves the
>household in deciding what proportion of income to spend (to consume) on
>the products of industry THIS PERIOD i.e., what proportion of income the
>household has a TIME PREFERENCE of consuming in the current period.
>
>If there is a residual then the household faces  a SECOND decision -- in
>what form of TIME MACHINE (ie., what store of value) should the household
>store that portion of today's non consumed income. This second (and
>independent) decision was called , by Keynes, LIQUIDITY PREFERENCE

>thereby providing a symmetry in nomenclature to the classical time
>preference concept].

>...