But hoarding money (despite not being an insurance for society as a whole) is an insurance to uncertainty for the money hoarder. And he gets that insurance for free (no significant storage costs) so that's clearly an externality.
That's not clear to me, make it clear.
Yeah, that's what I don't get either. How does he get it for "free"? If that's one of the uses to which money can be put, doesn't that make money more valuable? And wouldn't that value have been factored into the exchange in which the "money hoarder" originally acquired the money by trading goods and/or services for it? And isn't hoarding money also not free in the opportunity cost sense? If you're hoarding money, that means you're foregoing current consumption and the opportunity to invest that money for a greater return.
And even if it were "free," I still don't get how you're imposing a cost on society. Again, it seems like the effect of hoarding your money is to make goods and services cheaper for everyone else (because there's now less money chasing the same goods). That seems like a
benefit to society rather than a negative externality. And that's why it's rewarded with increased purchasing power in an economy that uses sound money.
Hoarding oil or food is like an insurance for a lack in supply for those things, right?
You pay for that insurance through storage costs and through the deterioration of the wares you're storing.
Well, when you hoard money you get an insurance against uncertainty, because money is like a wildcard. And you get that advantage for free, hoarding bitcoins doesn't have any associated costs.
It is a positive externality for the money hoarder (maybe like getting "profits" from growth caused deflation). The point is that externalities are paid for somewhere else.
I'm not sure how that's responsive to my objections. Let's say you want to sell some widgets, i.e., buy some money with them. You have two potential buyers. A has 10 gold pieces he's willing to exchange for widgets. B has 10 identical gold pieces, but B's gold comes with a catch. If you don't spend B's gold pieces and instead try to "hoard" them, he gets to take 1 one of them back every year they're not spent. Now you might be willing to trade with both, but you'll probably be willing to give A more widgets in exchange for his gold than you will B. That difference in the "price" (in widgets) of A's money vs. B's money is the price you pay for the additional "insurance" (to use your term) that's provided by A's gold. So it's NOT "free." It's a bargained-for benefit of A's gold that he gives up and you acquire when the exchange takes place.
And again, even if something is "free," that's not sufficient to establish that it's a negative externality that someone else is being forced to pay for -- unless you think Bastiat's candlemakers had a point with their petition?