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Tuesday, December 18, 2012

Malthus on Savings

"No political economist of the present day can by saving mean mere hoarding." -- Principles of Political Economy, p. 38

Some commenters have taken me to be endorsing Malthus when I post quotes from him or try to create a model that duplicates what he was thinking: I swear, I am only attempting to understand him at present. Once I do that, I might endorse him or not!

7 comments:

  1. The issue of what really constitutes savings is really a complicated topic with a whole range of different opinions out there. I am sure in it and the lack of a proper definition for it a lot of confusion and bad reasoning is rooted. That definitely is a key issue.

    I think it is at least not uncommon to assume that someone might agree with some quotes if he presents them without any further comment. A disclaimer therefore makes sense.

    However, thanks for providing those quotes!

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  2. Hoarding is saving when real interest rates are negative.

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    Replies
    1. Not per Malthus it ain't.

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    2. Which is why Malthus may not be the best economist to go to when searching for insights. And why that quote by Malthus is a pretty bad one.(whether you endorse it or not)

      Economists of his day did not appreciate the interest rate mechanism in the way that we do now and this led Malthus to make mistakes that, today, we would consider to be quite elementary.

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    3. "Which is why Malthus may not be the best economist to go to when searching for insights."

      Why, because he made a mistake? In the future I will only go to economists who have never made a mistake for my insights.

      "And why that quote by Malthus is a pretty bad one."

      Huh?

      "this led Malthus to make mistakes that, today, we would consider to be quite elementary."

      I would rather *understand* a great thinkers view, and then judge them, rather than judge them first so I can ignore them.

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  3. I just hope your final decision to endorse or not takes note of how cash hoarding provides a "yield" in terms of preserving option value and as an insurance policy against the unexpected (though that's probably the same thing). After all, why not allocate your expenditures the moment you earn the money.

    I know that comment was random, but it's something a lot of economists have to be told, it seems. Not you, but I just wanted to express hope that your evenhandedness prevents you from missing that.

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    Replies
    1. Right and the opportunity cost to option value is the real yield/return (+ considered investment risk) they could get if they invest the money into e.g. stocks. People being able on net to move rather in this or that direction is an important market signal, that is needed to clear markets from bubbles and malinvestments imho...

      I think you are right to mention this issue over and over again.

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