Being that we are in the Christmas shopping season, there will be lots of analysis in the news focused on how much is spent at this time of the year with the metric of choice being consumer spending.  With so much focus given to consumption, it gives the impression that the most important economic factor is spending and consumption.  Unfortunately, saving is not held  in high esteem, and it is actively discouraged.  While consumption is a normal part of human action, it must be noted that savings are the cornerstone on which wealth and the ability to consume is built.  In order for goods to be available for consumption, they must first be produced, and savings help to increase production by reserving resources for capital which is utilized in the production of more consumer goods.

To help illustrate these concepts and whet your appetite for more economic knowledge, I invite you to enjoy this video from EconStories.  It has been around for a while, but if you haven’t seen it, you are in for a treat.  If you have seen it, watch it again for more enjoyment!

Leave a Reply