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No, our economic system does not rely on lots of consumers. It relies on people spending money. 1,000 people spending $1 is equivalent to one person spending $1

No, our economic system does not rely on lots of consumers. It relies on people spending money. 1,000 people spending $1 is equivalent to one person spending $1,000. It is the dollar amount of spending that is important, not the total amount of consumers. Another key economic metric is the velocity of money...or how fast money goes from one person to the next. The faster the velocity of money...the better because we assume that when people trade...both are made better off through specialization.

Broken_Hippo 8y ago
That isn't really true, though. If 1000 people spend $1000, that isn't the same as a person spending all that in one month. The 1000 people are going to spend the money differently and on a variety of things. Phone bills, electric, car payments, groceries, rent, clothes, entertainment, coffee. Perhaps a restaurant or two or a bar. Might need school supplies and medicine. Even better, these 1000 people are likely to do this monthly. One person spending 1,000,000 isn't likely to spend it on those categories nor spend that monthly. Even then, the spending is going to be different. The spending is also more likely to be stable. The economy generally will survive if the one person doesn't spend their 1,000,000. Even if they stop spending that monthly, that'll be OK. However, the economy will suffer if the many people do not spend 1000 a month, depending on how close the people are to each other. All in one town probably means an employer has had hard times, and eventually other businesses close because of it - unless, of course, things start getting better again. The economy hurts if trends shift. When folks get more poor and cannot spend on small luxuries or stop buying as mnay cheap clothes, the economy suffers. The person able to spend 1,000,000 a month likely very much depends on those 1000 people spending 1000 per month, consuming the things they do.

Broken_Hippo 8y ago

That isn't really true, though. If 1000 people spend $1000, that isn't the same as a person spending all that in one month. The 1000 people are going to spend the money differently and on a variety of things. Phone bills, electric, car payments, groceries, rent, clothes, entertainment, coffee. Perhaps a restaurant or two or a bar. Might need school supplies and medicine. Even better, these 1000 people are likely to do this monthly. One person spending 1,000,000 isn't likely to spend it on those categories nor spend that monthly. Even then, the spending is going to be different. The spending is also more likely to be stable. The economy generally will survive if the one person doesn't spend their 1,000,000. Even if they stop spending that monthly, that'll be OK. However, the economy will suffer if the many people do not spend 1000 a month, depending on how close the people are to each other. All in one town probably means an employer has had hard times, and eventually other businesses close because of it - unless, of course, things start getting better again. The economy hurts if trends shift. When folks get more poor and cannot spend on small luxuries or stop buying as mnay cheap clothes, the economy suffers. The person able to spend 1,000,000 a month likely very much depends on those 1000 people spending 1000 per month, consuming the things they do.