> Only lending or investment expresses time preference; a hoard is liquidity held for consumption.
All deferred consumption demonstrates low(er) time preference. That includes holding cash balances.
> If everyone hoarded and no one lent, interest rates would be infinite, reflecting infinite time preference.
Imagine you are Crusoe, hoarding fish to live on while you make a net. Is that demonstrating an infinitely high time preference?
Hoarding isn't deferred consumption; it's holding present goods in present form. The hoard is liquidity now, a present good. Time preference is expressed through exchange of present goods for future goods. Holding cash makes no such exchange; you keep present goods as present goods.
Crusoe saving fish to build a net isn't hoarding in the monetary sense. He's investing in a longer production process, exchanging present goods (fish, labor time) for future goods (net, greater fish yield). That's textbook low time preference. If Crusoe just piled up fish and never built anything, he'd eventually eat them. The pile isn't deferred consumption; it's inventory awaiting consumption.
In a monetary economy, if everyone holds cash and no one lends, the supply of loanable funds is zero. Zero supply at any positive demand means the market-clearing price (interest rate) approaches infinity. This doesn't describe Crusoe; he's not in a loan market. It describes a monetary economy where no one participates in the time market.
Hoarding (i.e., saving) is literally deferred consumption. That is the definition of saving. Saving is not consumption.
Also, interest rate is not time preference. Time preference is part of human nature. It does not require a loan market or an interest rate or money or society.
That Crusoe is not in a loan market is precisely the point. You say (correctly) that Crusoe is demonstrating low time preference by saving. But then you introduce money and loan markets and interest rates and get confused.
> If Crusoe just piled up fish and never built anything, he'd eventually eat them. The pile isn't deferred consumption; it's inventory awaiting consumption.
I think this is the root of your mistake: "It isn't deferred consumption; it is merely *awaiting* consumption." ?????
Waiting == deferring, right?
> Time preference is not a moral category, and "lower" is not inherently better than "higher."
Agree.
Lower time preference is *usually* (and reasonably) seen as virtuous, but there are limits, and it depends on the circumstances.
Scrooge is a great example of low time preference as a vice. (You will probably say he has high time preference though.)
