Thursday, March 22, 2007

Followup on Christmas

The Amazing Story of William McAdoo

I've recieved fan reviews on my take on Christmas, along the lines of "But holiday spending supports the retail sector!" Sure it does, at the expense of other industries.

Suppose you don't empty your bank account for Christmas. In that case, the bank would've taken the money and invested it in whatever it thought possible. It's an economic principle that in a simple economy, investment equals savings. So instead of going to Wal-Mart, the bank loans your money to someone starting up a business, say, or invests in some project.

Personally, I know which one I think is better for the economy in the long run. (We'll avoid talking about over-saving since the savings rate for Canada is negative - we spend more than we earn; and the amount of junk mail I recieve for credit consolidation services. (This actually leads into a discussion of the world's cheap money, check back for more on that next time.)

Money is a flow. Savings aren't bad. Christmas, however, is.

No comments: