Between hoarding money and living paycheck-to-paycheck

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kmarinas86's picture
kmarinas86
Status: Silver Member (Offline)
Joined: Dec 29 2008
Posts: 164
Between hoarding money and living paycheck-to-paycheck

The money we have is only worth what we trade it for. How much we trade it for can be described in terms of good and services. However, the volume of goods and services in an economy is principally determined by the frequent use of our money. A declining frequency of the use of our savings leads to a running down of prices and wages which can only be propped up again by using money that is not from savings. An increasing frequency of the use of our savings and credit leads to a running up of prices and wages as well as more fear about savings for the future as well as more pressure to obtain money by whatever means desired. Because the nature of business cycles is principally determined by volatility of asset balances, the prevention and cure to economic turmoil must address the critical issue of "runs on assets".

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