Two conflicting models of hoarding in the economic circuit, and their consequences

The concept of a “propensity to hoard” is frequently used by Post Keynesians and Circuitists in time-discrete models of the macroeconomy, to account for how households manage their flow of savings. This concept is argued to be erroneous ­ and continuous-time models are better than discrete for a clear understanding of this. The phenomenon of time dispersion of circulating money is introduced and turns out to be very useful. An alternative circuit model with debt is assembled and simulated. Even at high interest and savings rates the system evolves without ending in debt-induced crisis.