The argument isn't that Mises is wrong, but that Rothbard clarifies him, and the Bitcoin community departs from both.
Rothbard in Man, Economy, and State: "People allocate their money among consumption, investment, and hoarding. The proportion between consumption and investment reflects individual time preferences." Three margins, not two. Hoarding is orthogonal. You can increase hoarding without changing time preference at all if you draw proportionally from both consumption and investment.
Non-monetary case: Crusoe can eat coconuts (consume), plant them (invest), or store them (hoard). His time preference is the ratio of eating to planting. Stored coconuts provide present utility: security, optionality, peace of mind. They're consumed as liquidity services right now, while depreciating and costing him the yield he'd earn by planting. If he stores 100% and plants nothing, his time preference isn't zero, it's infinite: he refuses to exchange present goods for future goods plus interest at any price.
On "plain saving": Rothbard says treating saving as a single decision that expresses time preference is wrong. Savings encompasses two distinct decisions: how much to invest and how much to hoard. Only investment expresses time preference through interest. Hoarding expresses liquidity preference under uncertainty.
The hodler enjoys present satisfactions: speculation entertainment, security, optionality. These are present goods consumed now. What's deferred is only the purchase of other goods, but that deferral isn't investment since no temporal exchange for interest occurs. The hodler who refuses to lend at any rate expresses infinite time preference, not zero.
Replies (2)
I think Rothbard is not clarifying Mises there; he is contradicting him, and I think he is making a mistake in doing so.
I would say (and I think I am following Mises) it is the proportion between consumption and non-consumption (hoarding + investment) that reflects time preferences.
Again from Human Action:
"He who consumes a nonperishable good instead of postponing consumption for an indefinite later moment thereby reveals a higher valuation of present satisfaction as compared with later satisfaction"
That's time preference, and there is no need to invoke investment or interest to explain it.
If the stored coconuts keep Crusoe alive while he builds a boat...then what? They provide all the same present utility prior to consumption. Are they now an investment rather than a hoard? What's the difference?
There is no obvious distinction between saving and investment in an autarchic economy. There is always time preference though.
I think Mises is wrong here, Rothbard and especially Voskuil have a more nuanced understanding of it.
The hoarder isn't postponing consumption. He's consuming NOW: consuming the services of the hoarded good. Security is a present satisfaction. Optionality is a present satisfaction. Peace of mind is a present satisfaction. These aren't future goods; they're present goods produced by the act of holding. The hoarder has purchased something with his capital, he's just purchased liquidity services rather than apples.
The boat case proves rather than undermines this. When Crusoe stores coconuts to eat while building, he IS engaging in temporal exchange, with himself. Present-Crusoe lends to future-boat-building-Crusoe. The "interest" is the boat. He exchanges present consumption for a future good plus return. This differs categorically from storing coconuts indefinitely for security with no productive deployment. The former is investment; the latter is hoarding. The distinction doesn't dissolve in autarky; it becomes intra-personal rather than inter-personal.
Time preference is revealed by the minimum rate at which you'll exchange present for future goods. A purely psychological "orientation toward the future" that never manifests in willingness to lend isn't economically meaningful because it produces no observable market phenomena. The HODLer who won't lend at any rate has revealed infinite time preference in the only sense that matters economically: no offered future return compensates him for parting with present capital.
