🤦 Please read Chapter 18 of Human Action.

https://mises.org/online-book/human-action/chapter-xviii-action-passing-time/2-time-preference-essential-requisite-action

A teaser:

"The theorem of time preference must be demonstrated in a double way. first for the case of plain saving in which people must choose between the immediate consumption of a quantity of goods and the later consumption of the same quantity. Second for the case of capitalist saving in which the choice is to be made between the immediate consumption of a quantity of goods and the later consumption either of a greater quantity or of goods which are fit to provide a satisfaction which--except for the difference in time--is valued more highly."

--> Both plain savings (i.e., hoarding) and investment are expressions of time preference.

On the productivity of plain savings:

"If an individual employs a sum of money not for consumption but for the purchase of factors of production, saving is directly turned into capital accumulation. If the individual saver employs his additional savings for increasing his cash holding because this is in his eyes the most advantageous mode of using them, he brings about a tendency toward a fall in commodity prices and a rise in the monetary unit’s purchasing power....The effect of our [p. 522] saver’s saving, i.e., the surplus of goods produced over goods consumed, does not disappear on account of his hoarding. The prices of capital goods do not rise to the height they would have attained in the absence of such hoarding. But the fact that more capital goods are available is not affected by the striving of a number of people to increase their cash holdings. If nobody employs the goods--the nonconsumption of which brought about the additional saving--for an expansion of his consumptive spending, they remain as an increment in the amount of capital goods available, whatever their prices may be. Those two processes--increased cash holding of some people and increased capital accumulation--take place side by side."

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Discussion

Mises's "plain saving" describes choosing "later consumption of the same quantity," but my point is that the hoarder isn't actually deferring consumption: they're consuming the money's services (liquidity, optionality, removal of uneasiness) in the present moment.

The second quote addresses whether hoarding is economically productive (it is), which is a separate question from whether it reveals time preference through the mechanism of originary interest. Mises himself defines originary interest as the discount of future goods against present goods in exchange, which hoarding by definition does not involve since no temporal exchange occurs.

"the hoarder isn't actually deferring consumption: they're consuming the money's services (liquidity, optionality, removal of uneasiness) in the present moment."

Are you trying to say that Mises is wrong, or that your definition of hoarding is somehow different than Mises' "plain saving"?

Assuming the latter, I think it would help clarify things if you could explain that difference in relation to a non-monetary economy. (I think you will find that there is no difference.)

"...whether it reveals time preference through the mechanism of originary interest. Mises himself defines originary interest as the discount of future goods against present goods in exchange, which hoarding by definition does not involve since no temporal exchange occurs"

But Mises does not say that originary interest is the ONLY way time preference is expressed. My first quote from HA very clearly says the opposite, in fact.

The argument isn't that Mises is wrong, but that Rothbard clarifies him, and the Bitcoin community departs from both.

Rothbard in Man, Economy, and State: "People allocate their money among consumption, investment, and hoarding. The proportion between consumption and investment reflects individual time preferences." Three margins, not two. Hoarding is orthogonal. You can increase hoarding without changing time preference at all if you draw proportionally from both consumption and investment.

Non-monetary case: Crusoe can eat coconuts (consume), plant them (invest), or store them (hoard). His time preference is the ratio of eating to planting. Stored coconuts provide present utility: security, optionality, peace of mind. They're consumed as liquidity services right now, while depreciating and costing him the yield he'd earn by planting. If he stores 100% and plants nothing, his time preference isn't zero, it's infinite: he refuses to exchange present goods for future goods plus interest at any price.

On "plain saving": Rothbard says treating saving as a single decision that expresses time preference is wrong. Savings encompasses two distinct decisions: how much to invest and how much to hoard. Only investment expresses time preference through interest. Hoarding expresses liquidity preference under uncertainty.

The hodler enjoys present satisfactions: speculation entertainment, security, optionality. These are present goods consumed now. What's deferred is only the purchase of other goods, but that deferral isn't investment since no temporal exchange for interest occurs. The hodler who refuses to lend at any rate expresses infinite time preference, not zero.

I think Rothbard is not clarifying Mises there; he is contradicting him, and I think he is making a mistake in doing so.

I would say (and I think I am following Mises) it is the proportion between consumption and non-consumption (hoarding + investment) that reflects time preferences.

Again from Human Action:

"He who consumes a nonperishable good instead of postponing consumption for an indefinite later moment thereby reveals a higher valuation of present satisfaction as compared with later satisfaction"

That's time preference, and there is no need to invoke investment or interest to explain it.

If the stored coconuts keep Crusoe alive while he builds a boat...then what? They provide all the same present utility prior to consumption. Are they now an investment rather than a hoard? What's the difference?

There is no obvious distinction between saving and investment in an autarchic economy. There is always time preference though.

I think Mises is wrong here, Rothbard and especially Voskuil have a more nuanced understanding of it.

The hoarder isn't postponing consumption. He's consuming NOW: consuming the services of the hoarded good. Security is a present satisfaction. Optionality is a present satisfaction. Peace of mind is a present satisfaction. These aren't future goods; they're present goods produced by the act of holding. The hoarder has purchased something with his capital, he's just purchased liquidity services rather than apples.

The boat case proves rather than undermines this. When Crusoe stores coconuts to eat while building, he IS engaging in temporal exchange, with himself. Present-Crusoe lends to future-boat-building-Crusoe. The "interest" is the boat. He exchanges present consumption for a future good plus return. This differs categorically from storing coconuts indefinitely for security with no productive deployment. The former is investment; the latter is hoarding. The distinction doesn't dissolve in autarky; it becomes intra-personal rather than inter-personal.

Time preference is revealed by the minimum rate at which you'll exchange present for future goods. A purely psychological "orientation toward the future" that never manifests in willingness to lend isn't economically meaningful because it produces no observable market phenomena. The HODLer who won't lend at any rate has revealed infinite time preference in the only sense that matters economically: no offered future return compensates him for parting with present capital.

Lets put aside the Rothbard vs Mises view of time preference. I'm still on the side of Mises, but apparently reasonable Austrians can disagree. However...

"The hoarder isn't postponing consumption..."

Hoarding a good does provide present utility, but that is not the same as consuming it. A non-perishable good like money is not used up, or worn out, or otherwise diminished in utility when it is held. The hoarder retains the full (present and future) services of the good until it is *actually* consumed or exchanged.

Rothbard recognized that too, as you mentioned above when he refers to 3 margins, not 2; and you yourself refer to hoarding as orthogonal, which would not be the case if hoarding and consumption were identical.

"A purely psychological "orientation toward the future" that never manifests in willingness to lend isn't economically meaningful because it produces no observable market phenomena."

Hoarding is not purely psychological. Hoarding in an exchange economy reduces demand for all other goods and increases the exchange value of the hoarded good. It definitely has effects in the market. This was the point of the 2nd Mises quote in my original reply. Whether those effects are observable is not relevant to economic theory.

"The HODLer who won't lend at any rate has revealed infinite time preference in the only sense that matters economically: no offered future return compensates him for parting with present capital."

The interest rate here is undefined, not infinite. You can't infer from a refusal to exchange present for future goods that the reason was an insufficient interest rate. Observed interest rates are partially explained by time preference, but they are not identical with it, nor do they measure it. There is always an entrepreneurial component.

It's the "stay humble" part of "stay humble and stack sats."

> Hoarding a good does provide present utility, but that is not the same as consuming it. A non-perishable good like money is not used up, or worn out, or otherwise diminished in utility when it is held.

Yes, and my point is the loss of the interest foregone, that's the opportunity cost that is sacrificed by hoarding.

> Rothbard recognized that too, as you mentioned above when he refers to 3 margins, not 2; and you yourself refer to hoarding as orthogonal, which would not be the case if hoarding and consumption were identical.

I'm not saying that hoarding and consumption is identical, what is consumed is the interest foregone.

> Hoarding is not purely psychological.

Agreed, what I mean is that time preference is manifested in action, and specifically to increase the investment to consumption ratio.

> Hoarding in an exchange economy reduces demand for all other goods and increases the exchange value of the hoarded good. It definitely has effects in the market. This was the point of the 2nd Mises quote in my original reply. Whether those effects are observable is not relevant to economic theory.

Exactly.

> The interest rate here is undefined, not infinite.

Undefined seems a less useful term than infinite here. At least the price is not enough to convince him to engage in trade.

> You can't infer from a refusal to exchange present for future goods that the reason was an insufficient interest rate. Observed interest rates are partially explained by time preference, but they are not identical with it, nor do they measure it. There is always an entrepreneurial component.

Yes.