THE CONCEPT OF HOARDING
This chapter discusses the concept of hoarding. An increase in hoarding may mean an increase in the desire to hold money as opposed to securities. If the total quantity of money is kept constant, an increase in the actual amount of money held by the community as a whole cannot occur, but an increase in the desire to hold money brings about a rise in the rate of interest—a fall in security prices. An increase in hoarding may mean an increase in the actual amount of money held by the public. Hoards may be used to mean not the total quantity of money, but the total minus the active circulation. Hoards may be measured not in money, but in real terms. In this sense, an increase in hoarding means an increase in the real value of the total stock of money. An increase in the quantity of money, other things equal, leads to a fall in the rate of interest, and after a time, to an increase in investment, incomes and trade activity.