320

A TREATISE ON MONEY

BK. IV

phase of the cycle but will afterwards rise again to itsprevious level, any individual by postponing the dateof his consumption and transferring the equivalentto his savings-deposits can gain not only the normalrate of money interest but, in addition, the equivalentof the prospective increase in the value of moneycalculated as a rate per cent per annum. Thus theremay be a substantial motive in operation influencingindividuals to modify the time-distribution of theirconsumption. In the earlier stages of the price risethis stimulus will be small, both because prices willnot have risen much and because the date of theprospective fall of prices will still be remote. But inthe later stages, when the prospective fall is bothlarge in amount and near in time, it will become sub-stantial. Thus, given correct forecasting, this factormay do something to smooth away the hump at thetop of the price curve.

(2) Assumption Beta.

In the same sort of way, various irregularities areintroduced, which it would not be difficult to describein any particular case, but which do not lend them-selves to a generalised description, if the bankingsystem facilitate the increase of employment andaggregate earnings, at a faster or a slower rate thanthat which has been assumed.

(3) Assumption Gamma.

We assumed that all available income is purchasedand consumed as it is produced, the volume of liquidconsumption capital (if any) remaining constant; thatis to say, that there can be no hoarding of ready retailgoods and that there are no initial stocks of them.This assumption would be unreservedly valid if, andin so far as, available output is perishable and there-fore incapable of being hoarded. But in so far asavailable output is not perishable, obviously the pros-