Post
Topic
Board Economics
Re: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation =
by
Impaler
on 15/04/2013, 19:38:07 UTC
This is a common claim that looters like to make to justify their theft.

It turns out to be exactly 180 degrees from truth.  The reality is that savers are doing a service for the market, not the other way around.  By deferring consumption, you are allowing the market to invest the resources that you would have consumed in the construction of new productive assets.  Growing the productive base is a good thing, and should be rewarded.

Saving is not the same as INVESTING, saving is simply withdrawing currency from circulation and dose not result in any increase in future production, in fact all evidence points to a reduction in future production when this is done.  An investment is a form of consumption, capital goods are purchased, buildings constructed etc, this adds to the stock of capitol.  On the other-hand saving simply results in an unconsumed surplus of goods (generally consumer goods) and this reduces the returns of those that produced them causing them to lower production, reduce labor costs and scrap excess capital that can't be productive.  Thus some of the collective stock of capitol is destroyed needlessly, years later this must all be rebuilt to accommodate the new consumption, the wasted capitol if it had been utilized would have lead to an even larger production in the future, this is why boom-and-bust is bad.


alexeft:  It is saving without loss that is the problem, if a person saved real goods they would have a carrying-cost to that saved value.