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The Demand for Money as a Store of Value

In: Money and the Real World

Author

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  • Paul Davidson

Abstract

That portion of the money supply which is being used to satisfy the needs for a medium of exchange as determined by households’ desire to use money to buy producible goods and entrepreneurs’ desires to use money to buy services of the factors of production will consist of ‘active’ bank deposits. The use of these active balances was termed the industrial circulation by Keynes in his Treatise on Money, as opposed to the use of the portion of the money supply which is involved in the business of distributing titles or stores of wealth, the financial circulation. The industrial circulation as developed in the last chapter, depends primarily on the length of the contractual payments period, the aggregate planned demand for producible goods, the money rates of remuneration of the factors of production employed, and the degree of industrial integration. In this chapter we shall discuss the determinants of the quantities of money demanded for the financial circulation where by finance we mean the business of holding and exchanging existing titles to wealth … including Stock Exchange and Money Market transactions, speculation and the process of conveying current savings and [windfall] profits into the hands of entrepreneurs.1

Suggested Citation

  • Paul Davidson, 1978. "The Demand for Money as a Store of Value," Palgrave Macmillan Books, in: Money and the Real World, edition 0, chapter 0, pages 189-212, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-15865-2_8
    DOI: 10.1007/978-1-349-15865-2_8
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