CH. 17 PROPERTIES OF INTEREST AND MONEY 233

Furthermore, if wages were to be fixed in terms of someother commodity, e.g. wheat, it is improbable that theywould continue to be sticky. It is because of money’sother characteristics—those, especially, which make itliquid —that wages, when fixed in terms of it, tend tobe sticky . 1

(c) Thirdly, we come to what is the most funda-mental consideration in this context, namely, the char-acteristics of money which satisfy liquidity-preference.For, in certain circumstances such as will often occur,these will cause the rate of interest to be insensitive,particularly below a certain figure , 2 even to a sub-stantial increase in the quantity of money in proportionto other forms of wealth. In other words, beyond acertain point money’s yield from liquidity does not fallin response to an increase in its quantity to anythingapproaching the extent to which the yield from othertypes of assets falls when their quantity is comparablyincreased.

In this connection the low (or negligible) carrying-costs of money play an essential part. For if its carrying-costs were material, they would offset the effect ofexpectations as to the prospective value of money atfuture dates. The readiness of the public to increasetheir stock of money in response to a comparativelysmall stimulus is due to the advantages of liquidity (realor supposed) having no offset to contend with in theshape of carrying-costs mounting steeply with the lapseof time. In the case of a commodity other than moneya modest stock of it may offer some convenience to usersof the commodity. But even though a larger stockmight have some attractions as representing a store ofwealth of stable value, this would be offset by itscarrying-costs in the shape of storage, wastage, etc.

1 If wages (and contracts) were fixed in terms of wheat, it might be thatwheat would acquire some of money’s liquidity-premium;—we will returnto this question in (rv) below.

a See p. 172 above.