Barkley Rosser wrote: "James A., I find your claim that the money supply 
must be cash to be, well, idiosyncratic.  If we evolve to a world 
without cash where everybody uses debit cards, would you deny that the 
demand deposits being drawn down by the use of those debit cards is the 
money supply? "

First, I was pointing out how one would employ classical theory (the 
quantity theory of money and Say's law) to interpret the Great 
Depression.  The classics meant by "money" cash.  All other media of 
exchange they called "money substitutes."  I have compiled the classical 
writers' statements of this (from David Hume to J.S. Mill) in chapter 2 
of my _Classical Macroeconomics_ (pp. 30-40; now available in paperback 
for only $37.50 at www.routledge.com/paperbacksdirect).  See also 
Marshall's _Money, Credit and Commerce_ (1923).   Even Keynes (1923) 
defines money as cash only.  Evidently, after reading Fisher, he decided 
to extend the definition of money beyond where Fisher stopped (the 
equivalent of modern M1) to include even unspent "overdraft facilities" 
with banks (Keynes 1930, 1:236), and sometimes to include treasury bills 
(1936).  But one easily gets into trouble (confused) trying to 
understand the classics when one is not paying close attention to the 
definitions they used and one reads them with Keynes's new definitions 
instead.   This was the main problem with Keynes himself, and continues 
to plague Keynesians stuck on his definitions.  As Jacob Viner notes in 
his 1936 review of the _GT_, "The book ... breaks with traditional modes 
of approach to ... problems. ... no old term for an old concept is used 
when a new one can be coined, and if old terms are used /new meanings/ 
are generally assigned to them.  The definitions provided, moreover, are 
sometimes of unbelievable complexity.  The old-fashioned economist must, 
therefore, struggle not only with new ideas and new methods of 
manipulating them, but also with a /new language/" to make meaning of 
Keynes's claims (p. 147; my Italics). 

Now, I wouldn't call demand deposits "the money supply," as Rosser 
suggests.  I include them among people's wealth or financial assets or 
savings.  I also get analytical clarity with that definition.  An 
increase in the demand for such deposits (all else constant) will lower 
interest rates, not raise them as modern macroeconomists using Keynes's 
definition of money would like to infer from their "money" supply and 
"money" demand theory of interest.

Would we ever get to a world without cash?  I doubt it.  There will 
always be the need for cash.  Not all of us would like to leave traces 
of our transactions (for possible government audit).  There also could 
be electricity failures making the use of debit cards impossible.  
Imagining giving my grandchild, nephew, or niece a small "cash" gift by 
exchanging my debit card with him or her, I'd leave to science fiction. 
Anyhow, I'm glad to share my idiosyncrasy on this issue with the likes 
of R. Glenn Hubbard (2005, 20).  Besides, central banks will never tire 
of the seigniorage from printing money, would they ever?

Rosser also asks: "do you deny that if people get worried about their 
status or businesspeople lose their optimism and become afraid of 
investing at any interest rates, that people cannot let their demand 
deposits pile up, even in a world of no cash?"

I don't know what "people [getting] worried about their status" means.  
But if they don't trust anyone else temporarily to borrow their unspent 
income (which demand deposit accounts really amount to), they would 
hoard their incomes in whatever form they are can.  True enough, if 
businesspeople lose their optimism, they would *reduce* their demand for 
funds to borrow.  But I cannot conceive of an economy in which there is 
a zero demand for credit (savings) or borrowing.  Someone always wants 
to spend more than they have the present means to attain that need.  

Rosser also writes: "Regarding your argument from Mill that there cannot 
be a general glut because surpluses of one commodity will be offset by 
deficits of another one, well, this is simply the claim that not only 
does supply create income equal to itself, but that aggregate supply 
always equals aggregate demand.  But, as I have noted above, this is 
simply empirically false.  We do see fluctuations of inventories, and a 
rise in aggregate inventories has long been one of the leading economic 
indicators that is considered to forecast the possibility of a downturn 
in economic activity, a recession, indeed one due to a 'general glut.' "

Here, I simply urge Rosser to re-read my Mill quotes.  If he wants 
additional quotes, including those from Say, James Mill, and Ricardo, he 
could read my chapter in Steve Kates 2003 edited book, "Say's Law: 
Keynes's Success with it Misrepresentation.."  I venture to mention it 
again, in spite of Rosser's earlier sneer at my mention of Kates's 
edited book, because he seems comfortable dealing with Kates in this 
exchange.  In sum, the classical argument is that there could be unsold 
goods, but that would be caused by an unsatisfied demand for money 
(cash), e.g., Mill (3: 574).  Thus, "In order to render the argument for 
the impossibility of an excess of /all commodities/ applicable to the 
case in which a circulating medium is employed, /money must itself be 
considered as a commodity/.  It must, undoubtedly, be admitted that 
there cannot be an excess of all other commodities, and an excess of 
money at the same time"  (Mill 1874, 71; emphasis added).  This is what 
some analysts, like Leijonhufvud, term the zero excess demand for goods 
and money in the aggregate. 

Believe it or not, I find repeating myself many times tiresome.  So I'd 
leave Rosser to hold on to his Keynesian confusions, if that is his 
pleasure.

James Ahiakpor