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Spending: The Economy’s Knight in Shining Armor

One of the great economic fallacies of the day has been the calculus which intends to track the amount of money spent as some grand testament to the wellbeing of an economy, or which intends to ennoble it as some grand savior, as if that solitary figure bears any relevance at all to the desired outcomes of the economy. 

This myth operates hand in hand with the belief that civilizations can spend and print their way to prosperity

Both myths fail to remain true to the modifying characteristics of free economies and money. 

If the purpose of an economy is to enable the realization of wants through the facilitation of trade between mutually-interested producers, and to — as a byproduct — incrementally improve the population’s standard of living, then the metrics must center around the appreciation of the population’s standard of living and the mutual satisfaction of wants, not around the nebulous volumes of spending. 

Taken in bare form, spending is completely meaningless, as it denotes no particular style of spending, nor does it capture the quality, character or sustainability of that spending. 

Ultimately, the propensity of the economy is to increasingly reduce human labor while maximizing leisure, which on balance amounts to the appreciation of the agents’ standard of living, typically by way of cost or labor savings. 

Put another way, this could conceivably amount to a shift or an outright decline in spending, or incidentally to a rise in savings for still future (or deferred) spending. 

Theoretically, if one were to possess everything he would ever need, his spending could immediately default to absolute zero. 

On the other hand, an individual of desperate need could find himself with an incredibly voracious spending habit, facilitated by debt or perhaps overconsumption (or dissaving). 

As neatly illustrated by this manageable dichotomy, we cannot decisively conclude the influence, whether positive, negative or neutral, of any changes to spending habits without an incisive investigation into the quality, character and sustainability of those practices and the lives of those actual agents beyond the theoretical model. 

Taken in bare form and without added context, today’s reports can project a future, or even a present, which is vastly different from the one presently or eventually realized. 

For this reason, it remains absolutely imperative for individuals to research and think critically for themselves, not to lazily accept the regurgitated reports or to subserviently sop up the sterile soup of the day.

Unfortunately, it appears that the world is everywhere desperately in search of that knight in shining armor, and economics fairytales abound in kind to keep the hysteria alive. 



By the time this one arrives after the relentless pursuit of theoretical nirvana, few if any of the original believers are left to witness it, and those who remain are only disappointed to encounter a kid in a cheap Party City costume, and a time characterized by increasing levels of spending, and elevated price levels, but not much else to show for it.


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