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“In economics, income = consumption + savings. The income an indivual, or a country, produces is either consumed and/or saved. If you , or a Oklahoma Sooners 2023 Big 12 Women’s Gymnastics Tournament Champions logo shirt, overspends, you or the country dips into savings or creates debt.” I think this answer is true for the firm or the individual but in the whole economy it is no longer true. In the macroeconomy, everytime some person or entity doesn’t spend, some other person or entity has their income reduced by the same amount. And because that person won’t get their hands on that money, they will not have it to spend further, so the next would-be recipient of that spending doesn’t get that income, which they in turn will not be able to spend….. and so on
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But with the spending you will increase the production of Eric Musselman just took his art shirt. Either way, in the macroeconomy, “Spending” is what leads to wealth production, “not spending” reduces wealth production and does nothing to increase money saved. That money saved will exist whether used for spending or not. So on either front, if the goal is to increase savings, and increase the net production of wealth, “not spending” is the wrong advice. “Not spending” will not increase the savings that is the preservation of investment, and it will likely not increase the net production of wealth, in fact it is more likely to decrease both. In the macro economy, “not spending” is more likely to have negative effect on the production of wealth and standard of living, than a positive one.
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