Monday, April 04, 2016

National wealth does not come from consumer spending

I talked to a millennial about economics, and she said that she was taught that consumer demand drove the economy. She said that most of the GDP was consumer spending, and the best thing the govt can do is to stimulate consumer spending by increasing the minimum wage, providing welfare benefits, and making it easier to borrow money. The worst thing was for people to save money, because that is what caused the Great Depression. Immigration is also good for the economy because it increases consumption.

Is this really what is taught in schools today?

The only reason consumer spending is most of GDP is because GDP is defined to exclude other types of spending.

You create wealth for yourself by saving money, not spending it. Debt turns people into wage slaves.

When the govt borrows money and gives it to consumers to spend, the net effect is that our nation is poorer.

Wealth can be created by hard work, inventions, advancing technology, and capital investment. It is not created by consumer spending.

This girl also told me that she was taking a class in Psychology/Sociology. I asked her what she was learning, and she spend ten minutes telling me stories that blamed white Christian society for all sorts of supposed ills. I finally told her that she is being brainwashed into feeling guilty about being white. She said, "I already feel guilty about being white."

Soon she will have a 6-figure student debt. When she gets married, they will get a big mortgage and decide that they cannot afford kids. They will have to work all the time to make payments on their debts. But somehow they will think that immigrants spending welfare checks in keeping our economy going.

The millennial generation has been duped.

1 comment:

Matthew Cory said...

I pointed to a nice review of the literature on the bogus multiplier.