25 days ago
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Posted On: September 21st 2026, 07:17 am
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The war on “hoarding” begins with a misunderstanding.
Cash holdings are not an economic defect requiring correction.
They are market signals.
When individuals increase their cash balances, they are communicating a preference for greater liquidity and a lower preference for present consumption or investment. That change in preferences is information. It affects prices, production decisions, and the allocation of resources just as surely as any other change in demand.
The moment policymakers treat the demand for money as a problem to be solved, they begin manipulating the very mechanism that coordinates all economic activity.
Cash holdings are not an economic defect requiring correction.
They are market signals.
When individuals increase their cash balances, they are communicating a preference for greater liquidity and a lower preference for present consumption or investment. That change in preferences is information. It affects prices, production decisions, and the allocation of resources just as surely as any other change in demand.
The moment policymakers treat the demand for money as a problem to be solved, they begin manipulating the very mechanism that coordinates all economic activity.
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