Production takes place through borrowing and lending and equity financing through the financial sector. In the credit production economy, money balances can be drained into hoarding as well as financial speculation. Economies can be analyzed either at a point in time or over time. A stock analysis holds time still to observe what currently exists. A flow analysis observes the economy over time.
Economic analysis can proceed on one of two assumptions about the future.
Either the future is known or predictable, in some probabilistic sense, or it is not. In the first sense, economic participants are never subject to disappointment, because they know what the future holds. If it is not known, then economic participants must remain more liquid in anticipation of disappointments down the road. The distinction between the two types of uncertainty is important because it influences how one views money. If the future is predictable, then there is no reason to hold idle money balances.