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It's an abstraction on top of reality so that we can wrap our brains around it. And unfortunately, it can be a very leaky abstraction at times. For example, m
by nhaehnle 15y ago
It's an abstraction on top of reality so that we can wrap our brains around it.
And unfortunately, it can be a very leaky abstraction at times.
For example, most people have an implicit abstraction of money equals real things in their head, which causes them to believe certain claims about the relationship between the money supply and inflation, and this in turn leads to monetarily sovereign governments running deficits that are far too low to support a healthy economy.
Because if you only see that particular abstraction, you cannot see the effect of monetary saving. With that abstraction in mind, you can never understand the Paradox of Thrift.