Economics Dictionary of ArgumentsHome
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| Money market: The money market is a segment of the financial market where short-term borrowing, lending, and trading of highly liquid instruments occur. It deals in assets like Treasury bills, commercial paper, and certificates of deposit, typically with maturities of one year or less. The money market ensures liquidity and supports monetary policy implementation. See also Money, Banks, Central banks, Money substitutes, Credit._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Money Market - Dictionary of Arguments
Rothbard III 535 Money market/money relation/Rothbard: Once an increase to a greater level of gross investment occurs, (…) it is not maintained automatically. Producers have to maintain the gross investment, and this will be done only if their time preferences remain at the lower rates and they continue to be willing to save a greater proportion of gross monetary income. (…) this maintenance and further progress can take place without any increase in the money supply or other change in the money relation. Progress can occur, in fact, with falling prices of all products and factors.(1) ((s) Rothbard does not use the term „Money market“ but „money relation“). Rothbard III 774 If the PPM (purchasing power per monetary unit) falls, then more money in the hands of an individual may not necessarily Iower the time-preference rate on his schedule, for the more money may only just compensate him for the fall in the PPM, and his "real money stock" may therefore be the same as before. >Cash balance/Rothbard. This again demonstrates that the money relation (money supply and demand for money) is neutral to time preference and the pure rate of interest. Prices: An increased demand for money, then, tends to Iower prices all around without changing time preference or the pure rate of interest. Rothbard III 765 Equilibrium/money utility: Goods are useful and scarce, and any increment in goods is a social benefit. But money is useful not directly, but only in exchanges. (…) as the stock of money in society changes, the objective exchange-value of money changes inversely (though not necessarily proportionally) until the money relation is again in equilibrium. When there is less money, the exchange-value of the monetary unit rises; when there is more money, the exchange-value of the monetary unit falls. >Demand for money/Rothbard. Rothbard III 811 A change in the money relation necessarily involves gains and losses because money is not neutral and price changes do not take place simultaneously. Equilibrium: Let us assume - and this will rarely hold in practice - that the final equilibrium position resulting from a change in the money relation is the same in all respects (including relative prices, individual values, etc.) as the previous equilibrium, except for the change in the purchasing power of money. Changes: Changes in the demand for money or the stock of money occur in step-by-step fashion, first having their effect in one area of the economy and then in the next. Because the market is a complex interacting network, and because some People react more quickly than others, movements of prices will differ in the speed of reaction to the changed situation. Rothbard III 812 Gains and losses: When a change in the money relation causes prices to rise, the man whose selling price rises before his buying prices gains, and the man whose buying prices rise first, loses. The one who gains the most from the transition period is the one whose selling price rises first and buying prices last. Conversely, when prices fall, the man whose buying prices fall before his selling price gains, and the man whose selling price falls before his buying prices, loses. Causation/gains and losses: (…) there is nothing about rising prices that causes gains or about falling prices that causes losses. In either situation, some people gain and some people lose from the change, the gainers being the ones with the greatest and lengthiest positive differential between their selling and their buying prices, and the losers the ones with the greatest and longest negative differential in these movements. Which people gain and which lose from any given change is an empirical question, dependent on the location of changes in elements of the money relation, institutional conditions, anticipations, speeds of reaction, etc. >Buying price/Rothbard, >Selling price/Rothbard. 1. Very few writers have realized this. See Hayek, "The 'Paradox' of Saving," pp. 214 ff., 253 ff._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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