Economics Dictionary of ArgumentsHome
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| Clearing: In economics, clearing refers to the process of reconciling an options, futures, or securities transaction or the direct transfer of funds from one financial institution to another. Clearing is necessary for the matching of all buy and sell orders in the market. See also Economy, Transactions._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Clearing - Dictionary of Arguments
Rothbard III 770 Clearing/demand for money/Rothbard: Long-run influences on the demand for money in a progressing economy will tend to be manifold, and in both directions. On the one hand, an advancing economy provides ever more occasions for new exchanges as more and more commodities are offered on the market and as the number of stages of production increases. >Economy/Rothbard. These greater opportunities tend greatly to increase the demand-for-money schedule. If an economy deterirates, fewer opportunities for exchange exist, and the demand for money from this source will fall. Clearing: The major long-run factor counteracting this tendency and tending toward a fall in the demand for money is the growth of the clearing system.(1) Clearing is a device by which money is economized and performs the function of a medium of exchange without being physically present in the exchange. Rothbard III 771 Credits: There is obviously little scope for clearing, however, as long as all transactions are cash transactions. For then people have to exchange one another's goods at the same time. But the scope for clearing is vastly increased when credit transactions come into play. Once credit enters the picture, the clearing system can be extended to as many individuals as find it convenient. The more People engage in clearing operations (often in Places called "clearinghouses") the more cancellations there will be, and the more money will be economized. Demand for money: Clearing, then, is a process of reciprocal cancellations of money debts. It permits a huge quantity of monetary exchanges without actual possession and transfer of money, thereby greatly reducing the demand for money. Clearing, however, cannot be all-encompassing, for there must be some physical money which could be used to settle the transaction, and there must be physical money to settle when there is no 100-percent cancellation (which rarely occurs). Rothbard III 820 Clearing/Rothbard: Clearing is particularly appropriate for interlocal transactions, since costs of transporting money from one locale to another are likely to be heavy. >Geographic factors/Rothbard. Bills of exchange on each town (i.e., I.0.U.'s owed by each town) can be reciprocally canceled. Suppose that there are two traders, A and B, in Detroit, and two in Rochester, C and D. A sells C a refrigerator for 200 gold grams, and D sells B a TV set for 200 grams. The two debts can be cleared, and no money need be shipped from one place to the other. On the other hand, D's sale of a TV set may total 120 grams. Suppose for a moment that these are the only traders in the two communities. Then 80 grams will have to be shipped from Rochester to Detroit. In the latter case, the citizens of Detroit have, on net balance, decided to add to their cash holdings, while the Rochesterites have decided to diminish their cash holdings. Export/import: Economists have often described interlocal trade in terms of "gold export points" and "gold import points." RothbardVs: The use of such expressions assumes, however, that even though two localities both use gold money, it makes sense to talk of an "exchange rate" of the money of one locality for that of another. This exchange rate is set between the margins fixed by the cost of transporting money - the "gold import" and "gold export" points. Free market: This does not hold true on the free market, however. On such a market, all coins and bullion are expressed in terms of weight of gold, and it makes no sense whatever to speak of an "exchange rate" of the money of one place for the same money in another. How can there be an "exchange rate" of an ounce of gold for an ounce of gold? >Exchange rates. 1. On the clearing system, see Mises, Theory of Money and Credit, New Haven, Conn.: Yale University Press, 1953 and 1957. Reprinted by Liberty Fund, 1995. pp. 281–86._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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