[notahacker]

The whole article is a defence of the principle of actual hoarding as opposed to investment though, hence the author's expression of concern that spending the money might generate inflation, their focus on intertemporal arbitrage with assets rather than lending, and their contention that taking an asset out of circulation and profiting from its future price fall represents a tangible "time-shifting" service performed on the asset. Those who have read more mainstream economics and less Austrian economics would argue that any value generated (as opposed to rent extracted) comes not from what is withdrawn from circulation but from the advance of cash to the grain vendors who might be able to make better use of it than they could the unsold grain: the time value of money comes from allowing money to circulate towards those willing to invest in productive activity, not from withdrawing it from circulation. A corollary of the emphasis on circulation of money rather than withdrawal of goods is that whilst buying a yacht might be far from the best thing you could do for the Congoese people, creating a whole load of boatbuilding jobs (which in turn sees more goods spending and more production to meet increased spending) is likely still better for Congoese economic development than keeping the money you'd received from trading in their economy under your bed.

[mbrumlow]

But how are you removing a asset from circulation? Like I asserted in my original post when you are not using money, somebody else is -- unless you are actually putting your cash in a vault.

When ever you store money in a bank, it gives the bank the ability to make loans using that very money to other people who then can start other businesses which intern then generate more exchanges of cash with other people.

So again, unless you are actually storing raw cash under your bed -- the fact that you are not spending it is not a ill effect on the economy as a while. I also postulate nobody has a bed big enough to store enough raw cash that the economy would ever notice.

In short I am calling BS on the idea that you can actually remove money from circulation -- other than actually destroying it that is.

Maybe I am still missing the point, but just because you have a bunch of money does not mean you need to make boat building jobs. The bank can easily loan the money out to any of the Congolese people who can show that boat building is a good business. And you who have made a bunch of money off speculation can be part of that by simply hording your money into a bank.

[notahacker]

> But how are you removing a asset from circulation? Like I asserted in my original post when you are not using money, somebody else is -- unless you are actually putting your cash in a vault.

The original article - what we're actually discussing - chooses the example of buying and selling with cash through a window, and worries that actually putting the cash into circulation at all might create inflation. The example is carefully constructed to avoid anything being done with the money except buy and sell goods, and the act of withdrawing the grain from circulation is likewise celebrated as value creation. It's pure internet-Austrianism.

As for the real world, the ability of real world banks operating in a fractional reserve system to lend to boatbuilders is not constrained in any meaningful sense at the margin by speculators' willingness to deposit with them, whereas boatbuilders' willingness to pay staff and suppliers is entirely dependent on whether people who have accumulated wealth buy boats. So the causality works the same way: consumption, deferred or otherwise, is the necessary element for growth. And if people who've made a bunch of money off speculation want to really improve the world, they'll want their money invested somewhere more actively than a bank or spent.