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Not all of it is hoarding, but some of it is. The effects on the economy between letting your money sit in government bonds vs. purchasing a consumable cannot b

Not all of it is hoarding, but some of it is. The effects on the economy between letting your money sit in government bonds vs. purchasing a consumable cannot be even close. The worst is investing in foreign companies - that wealth completely disappears from the domestic economy. Stock options and commodities and currency speculation create no wealth, only move funds from one person to another. Even typical investments are mostly a closed loop where money moves from one wealthy investor to the next, never entering the general economy.

danielweber 12y ago
Our modern society exists because of accumulated wealth. Roads, buildings, computers, cars, refrigerators, factory equipment, power grids: those are accumulated wealth. (There are also intangible things that accumulate as well, but try landing on a desert island with a copy of Wikipedia and then attempting to build a computer.) The American economy is over 70% consumption. This doesn't mean "increase consumption to increase the American economy." We will probably never get under 50% consumption, because we are a mature economy with creature comforts. But the more we invest, the more stuff our children will have. Consumption is the easiest thing to gin up in the short term, so governments that are on rapid election cycles always can choose policies to bump them up. But, although I believe Keynesianism is correct when it says you should pump consumption to get out of a recession, I also believe Keynesianism is correct when it says you should not be encouraging consumption when not in a recession. You need to save when times are good and spend when times are bad.
refurb 12y ago
This doesn't make sense at all. If I buy a gov't bond, my money goes to the gov't to spend (they certainly aren't saving anything). If I send my money to a foreign company, the economy is global. It may or may not benefit my country, but it sure isn't being hoarded.

danielweber 12y ago

Our modern society exists because of accumulated wealth. Roads, buildings, computers, cars, refrigerators, factory equipment, power grids: those are accumulated wealth. (There are also intangible things that accumulate as well, but try landing on a desert island with a copy of Wikipedia and then attempting to build a computer.) The American economy is over 70% consumption. This doesn't mean "increase consumption to increase the American economy." We will probably never get under 50% consumption, because we are a mature economy with creature comforts. But the more we invest, the more stuff our children will have. Consumption is the easiest thing to gin up in the short term, so governments that are on rapid election cycles always can choose policies to bump them up. But, although I believe Keynesianism is correct when it says you should pump consumption to get out of a recession, I also believe Keynesianism is correct when it says you should not be encouraging consumption when not in a recession. You need to save when times are good and spend when times are bad.

refurb 12y ago

This doesn't make sense at all. If I buy a gov't bond, my money goes to the gov't to spend (they certainly aren't saving anything). If I send my money to a foreign company, the economy is global. It may or may not benefit my country, but it sure isn't being hoarded.