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CH. 17 PROPERTIES OF INTEREST AND MONEY

ence of holding assets in the same standard as that inwhich future liabilities may fall due and in a standardin terms of which the future cost of living is expectedto be relatively stable, is obvious. At the same timethe expectation of relative stability in the future money-cost of output might not be entertained with muchconfidence if the standard of value were a commoditywith a high elasticity of production. Moreover, thelow carrying-costs of money as we know it play quite aslarge a part as a high liquidity-premium in making themoney-rate of interest the significant rate. For whatmatters is the difference between the liquidity-premiumand the carrying-costs; and in the case of most com-modities, other than such assets as gold and silver andbank-notes, the carrying-costs are at least as high as theliquidity-premium ordinarily attaching to the standardin which contracts and wages are fixed, so that, even ifthe liquidity-premium now attaching to ( e.g .) sterling-money were to be transferred to (e.g.) wheat, the wheat-rate of interest would still be unlikely to rise abovezero. It remains the case, therefore, that, whilst thefact of contracts and wages being fixed in terms ofmoney considerably enhances the significance of themoney-rate of interest, this circumstance is, neverthe-less, probably insufficient by itself to produce theobserved characteristics of the money-rate of interest.

The second point to be considered is more subtle.The normal expectation that the value of output willbe more stable in terms of money than in terms of anyother commodity, depends of course, not on wagesbeing arranged in terms of money, but on wages beingrelatively sticky in terms of money. What, then,would the position be if wages were expected to bemore sticky ( i.e . more stable) in terms of some one ormore commodities other than money, than in terms ormoney itself? Such an expectation requires, not onlythat the costs of the commodity in question are expectedto be relatively constant in terms of the wage-unit for