Post
Topic
Board Economics
Re: Global Financial Crisis scenarios
by
tee-rex
on 08/07/2014, 15:08:29 UTC
You didn't answer my question. Actually, I see that you're trying to avoid answering it as much as possible. I am asking whether saving is better than consumption (I mean consumption financed from household earnings). Yes or no? Wink

Yes it is better

Saving is contrary to spending which means that money saved doesn't return into circulation but is lost for the economy, at least temporarily. If you say that saving is better than spending, this with logical necessity means that there was surplus of money in the economy in the first place. Besides that, it is assumed that ultimately the saved money will be spent, so this also implicitly implies that there will be shortage of money in the economy at the moment of spending (since your assumption states that saving is better than consumption). Don't you think that these two assumptions (surplus of money and shortage of money) are in a downright contradiction with what I previously explained to you about human psychology and how it works in respect to saving and spending? Smiley