liquidity-preference

We must now develop in more detail the analysis of the motives to liquidity-preference which were introduced in a preliminary way in chapter 13.

The General Theory of Employment, Interest, and Money 2003

They were concerned both with diminishing liquidity-preference and with increasing the quantity of money, and several of them made it clear that their preoccupation with increasing the quantity of money was due to their desire to diminish the rate of interest.

The General Theory of Employment, Interest, and Money 2003

There is, moreover, a further ground for liquidity-preference which results from the existence of uncertainty as to the future of the rate of interest, provided that there is an organlsed market for dealing in debts.

The General Theory of Employment, Interest, and Money 2003

The schedule of the marginal efficiency of capital depends, however, partly on the given factors and partly on the prospective yield of capital-assets of different kinds; whilst the rate of interest depends partly on the state of liquidity-preference (i.e. on the liquidity function) and partly on the quantity of money measured in terms of wage-units.

The General Theory of Employment, Interest, and Money 2003

The position could only be saved by some complicated assumption providing for an automatic change in the wage-unit of an amount just sufficient in its effect on liquidity-preference to establish a rate of interest which would just offset the supposed shift, so as to leave output at the same level as before.

The General Theory of Employment, Interest, and Money 2003

But — standing with one foot in the mercantilist world and with one foot in the classical world — he was confused concerning the relation between these two proportions, and he overlooked altogether the possibility of fluctuations in liquidity-preference.

The General Theory of Employment, Interest, and Money 2003

If there is some tendency to a measure of long-run uniformity in the state of liquidity-preference, there may well be some sort of rough relationship between the national income and the quantity of money required to satisfy liquidity-preference, taken as a mean over periods of pessimism and optimism together.

The General Theory of Employment, Interest, and Money 2003

Whilst liquidity-preference due to the speculative-motive corresponds to what in my Treatise on Money I called 'the state of bearishness', it is by no means the same thing.

The General Theory of Employment, Interest, and Money 2003

And when output has increased and prices have risen, the effect of this on liquidity-preference will be to increase the quantity of money necessary to maintain a given rate of interest.

The General Theory of Employment, Interest, and Money 2003

This is because the notion of liquidity-preference had escaped him.

The General Theory of Employment, Interest, and Money 2003