Hey Dave,
Smiling Dave: Isn't hoarding, by definition, abstention? Especially the kind of hoarding Keynes is talking about, long term hoarding. If the hoarding was of money used to invest, then maybe time preference is not lengthened [=more future oriented], but I don't think it has been obviously shortened. If it comes from money used to consume, then that is definately an indication that their time preference is more future oriented.
Isn't hoarding, by definition, abstention? Especially the kind of hoarding Keynes is talking about, long term hoarding. If the hoarding was of money used to invest, then maybe time preference is not lengthened [=more future oriented], but I don't think it has been obviously shortened. If it comes from money used to consume, then that is definately an indication that their time preference is more future oriented.
I think we agree but the terminologies can overlap, incidentally I think.
I'll say this:
Hoarding (money under the mattress) is definitely an abstention from consumption. As is investment (savings deposits, equities, etc.). Any increase in those two categories which comes as a result from a reduction in consumption does lengthen the capital structure by starving lower order businesses, freeing capital for higher order businesses. Even if very little of that money goes into investment. If both investment and consumption are subtracted from and investment suffers a greater subtraction, then the capital structure shortens.
It follows then that, in a recession, when many people may pull out resources from investment and into hoarding, it isn't indicative of a shortened time preference but of a lessened risk preference.
Everyone will benefit, because commodity prices go down as well, benefiting the producers who use them.
Capital theory instructs us that it is lower order businesses which will gain most from a gain in purchasing power originating in consumers when they are not applying said acquired purchasing power to investment.
The value of gold may have soared, but the value of the dollar didn't. Besides, 1930 was suffering from a decades long orgy of malinvestment, starting with the incredible destruction of capital of WW1, so how could it possibly be a time of record capital accumulation? The malinvestments had to be washed away first.
Ceded
A final question. Why is all this being addressed to me? Am I not merely repeating what Mises wrote in Human Action, Chapter 18, Section 9
Sorry Dave I don't mean to suddenly pile onto the wall of text that Neo and Student provided you, I just found objection to some of the things you said.
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
"Sorry Dave I don't mean to suddenly pile onto the wall of text that Neo and Student provided you, I just found objection to some of the things you said."
I thought it was because Dave is an awful person who eats babies but I guess you're answers kind of okay too...