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That's the common misconception. In reality, people spend their money when they want or need something. Today it's possible to hoard wealth in real estate/gol
by Geee 3y ago
That's the common misconception.
In reality, people spend their money when they want or need something.
Today it's possible to hoard wealth in real estate/gold/stocks. The value of the pile is guaranteed to go up because of guaranteed inflation. Yet for some reason the economy doesn't grind to halt. By your explanation, everyone would just sit on that pile like a dragon and never buy anything.
- jfengel 3y agoEconomists are perfectly happy with you buying stocks or real estate. That puts the money back in circulation, and funding something people use. They just don't want you sitting on cash.
- Geee 3y agoThe argument was that people wouldn't be consuming if their wealth keeps growing and everything gets cheaper all the time, and the economy would grind to a halt. It's the same thing with investments, and it isn't true. People can buy gold right now and sit on it until they die (in a few days), but they don't. People spend whenever they need or want something, which is the fundamental force that keeps the economy running, regardless of what type of money or wealth they possess.