Book 34. Which assets are more desirable to hold? Inventory < Deposits < Goods < Cash. Updated 2026.05.09

 Hello. This is Beta. Today's topic is currency. Speaking of currency, cash is the most liquid asset among all forms of money. Deposits are also highly liquid in terms of how easy they are to convert into cash and how easy they are to use for payments, but they are not as liquid as cash.

The functions of money include a measure of value that serves as a benchmark for money, a store of value such as deposits in banks, and a medium of exchange that mediates the exchange of goods. In this regard, I believe that money's function as a medium of exchange is the most important.

This is because, if one does not place importance on money as a store of value, meaning accumulating deposits, then money as a medium of exchange becomes a very important element. Deposits are currency, they are money. However, if one finds value in goods as commodities rather than accumulating currency as deposits, then money as a medium of exchange becomes important.

One value system is one in which people find more value in owning goods than in owning money. They prefer to own diamonds, gold, silver, cars, and houses rather than keeping savings. During wartime, however, a reversal occurs where goods are more valuable than cash.

And the following equation holds true. We assume that the equation "deposits < goods" is true. Is this assumption correct? The relationship between cash and deposits is similar to the relationship between goods and inventory. Based on that, deposits < cash and inventory < goods indicate high liquidity.

If our previous assumption is correct, the liquidity equation would be: Inventory < Deposits < Goods < Cash. Goods are already sold, deposits are held in banks, and inventory is unsold goods, so the liquidity equation above seems reasonable.

While the relationship of liquidity is generally deposits < commodities < cash, in wartime or other circumstances, commodities can be more valuable than cash, reversing this trend. It is the asset value of commodities as physical goods that allows them to rival cash in value.

"Did they hold onto assets that were highly liquid?"