The demand for money

The desire to hold money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future.... It operates, so to speak, at a deeper level of our motivation. It takes charge at the moments when the higher, more precarious conventions have weakened. The possession of actual money lulls our disquietude; and the premium which we require to make us part with money is the measure of the degree of our disquietude.

That's Robert Skidelsky quoting Keynes, in his New York Review of Books article on Niall Ferguson's The Ascent of Money. Current monetary policy is focused on trying to induce people to heighten their "disquietude", people whose past disquietude is what's avoided them from being in negative equity (in a broad sense). The attempted manipulation of expectations - and it's relative success/failure - is a signal extraction problem compunded by regime uncertainty.

Comments

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