Reply To: Q and A Session


Rothbard’s justification runs out as follows. Any act of saving-investing has earning a rate of return as motive. But holding money need not have such a motive. Money, like consumer goods, is a present good. In other words, the person holding money receives subjective value in the present, namely, the ability to deal more effectively with uncertainty than otherwise. Of course, holding a present good (whether money or a consumer good) entails an opportunity cost. But holding money does not entail foregoing present subjective value since it is a present good.

Rothbard also stresses “capitalist” saving, which entails an inter-temporal trade. An entrepreneur takes a present good (money) and buys a future good (resources) then produces output and sells it for a present good (money) at a future date. Holding money or other consumer goods in anticipation of their greater value in the future does not involve an inter-temporal trade of goods.

These points are not to deny that “plain” saving, i.e., acquiring and holding a good in anticipation of greater future value, can generate a money gain. But to call money holding “plain” saving of money involves its own theoretical difficulties. For example, since holding money involves no inter-temporal trade of goods it is unrelated to the rate of interest. To have a type of saving unrelated to the rate of interest introduces its own semantic problems.