By: Andrea Terzi
If you think that by not spending (i.e., saving) a bigger portion of your income you are thus providing more financial means to business investment, you may be dead wrong! Businesses are better off when you spend more (not less) of your income. Someone’s expense is another’s revenue.
A reduction of expenses will reduce revenues, so more savings reduce business cash flow. Businesses are better off when you spend more (not less) of your income. Paradoxically, you may find that businesses will borrow from you to finance the unsold inventories they are sitting on because you cut your consumption! Everyone’s expense is somebody’s revenue, and a reduction of expenses will reduce revenues, so more savings reduce business cash flow. When businesses need to finance their investments they have no desire that you spend less on their products to lend them (for interest!) the same amount they could receive directly through the cash register.
- Tags: Business, Investment, Revenue, Understanding money
Comment Form
- Independent Conn. Senate Candidate Warren Mosler Signs Pledge to Vote Against Any Cuts in Social Security or Medicare
- Views on Unemployment
- When is Government-Issued Debt Safe? If You Think This is Only True When Debt is Below Some Threshold You May be Dead Wrong
- The Fed is the Monopoly Supplier of Net Reserves to its Banking System; Therefore, has no Option But to Set at Least One Interest Rate
- In the Banking System, the Causation Runs From Loans to Deposits, That is: ‘Loans Create Deposits’.
- Operationally, Government Spending is Not Inherently Revenue Constrained. Any such Constraints Are Necessarily Self-Imposed
- Government $ Deficit = Non Government $ Surplus (Net Financial Assets)
- Warren Mosler on CNBC
- How to Fix the US Economy in Less Than 500 Words
- 2010 Mecpoc Symposium
- Mosler Summer Scholarship 2010
- What Will Change the Total Amount of Bank Deposits Held by the (Non-Bank) Private Sector?
- Does a Change in Our Spending Decisions Affect the Total Amount of Bank Deposits?
- Interview with Paul Davidson, Regarding the Crisis
- 2nd Mecpoc Symposium
- More Savings, Yet Less Business Finance: Why?
- Unemployment and Pro-War Sentiments?
- Why It's You and Me Deciding the Amount of Banknotes in Circulation
- Wars Waste Resources, So Does Unemployment
- Mosler Summer Scholarship 2009
- warren mosler: The Russian default was a typical fixed exchange rate blowup. The ruble was fixed at 6.45 to the [...]
- Robert Searle: I think when we are talking about banks, and money we are actually discussing ELECTRONIC DATA. T [...]
- Jonathan Stanford: Was the foreign USD debt burden enough to bring Russia to insolvency during the 1998 crisis? Because [...]
- Jonathan Stanford: Where di insolvency stem from in Russia in 1998 then? They devalued the RUB and defaulted on RUB den [...]
- 2nd Mecpoc Symposium | Mecpoc: [...] If you wish to join this event, please confirm your attendance by filling out this form. [...] [...]
