CH. 10 THE FUNDAMENTAL EQUATIONS 141

consumption and tlie ownership of wealth. In so faras he decides in favour of consumption, he must neces-sarily purchase goods—for he cannot consume money.But in so far as he decides in favour of saving, therestill remains a further decision for him to make. Forhe can own wealth by holding it either in the form ofmoney (or the liquid equivalent of money) or in otherforms of loan or real capital. This second decisionmight be conveniently described as the choice between“ hoarding ” and “ investing ”, or, alternatively, asthe choice between “ bank-deposits ” and “ securities ” 1

There is also a further significant difference betweenthe two types of decision. The decision as to thevolume of saving, and also the decision relating to thevolume of new investment, relate wholly to currentactivities. But the decision as to holding bank-deposits or securities relates, not only to the currentincrement to the wealth of individuals, but also tothe whole block of their existing capital. Indeed,since the current increment is but a trifling proportionof the block of existing wealth, it is but a minorelement in the matter.

Now when an individual is more disposed thanbefore to hold his wealth in the form of savings-depositsand less disposed to hold it in other forms, this doesnot mean that he is determined to hold it in theform of savings-deposits at all costs. It means thathe favours savings-deposits (for whatever reason)more than before at the existing price-level of othersecurities. But his distaste for other securities is notabsolute and depends on his expectations of the future

1 It is difficult to decide what is the most convenient exploitation ofexisting non-technical language for exact technical meanings. Unfortun-ately I have already had to use the terms “ hoarding ” and “ investing ”with meanings different from the above ; for I have defined “ hoards ”(pp. 128-9) to mean stocks of liquid consumption-goods, and “ investing ”(p. 126) to mean, not the purchase of securities by members of the public, butthe act of the entrepreneur when he makes an addition to the capital of thecommunity. I shall, therefore, use the second set of terms in what follows.