Savings Are Not to be Identified as an Increase in the Money Supply

Saving part of the income one has earned by producing something is identically a matter of not using that part of one’s income for consumption.   The money saved does not constitute an increase in the money supply.

What is saved may be spent at a later time  –  the next day or many years later in one’s retirement  –  for

  1. consumer goods
  2. repair and maintenance goods
  3. expansionary capital goods
  4. nonproductive secondary stocks, bonds, etc,

But, if one’s savings are devoted only to increasing one’s net worth in secondary holdings beyond what one will ever need for one’s family or for philanthropy and cultural betterment, and if one’s savings does not induce a compensating movement by someone else of money back into the operative circuits, the act of saving constitutes a drain of money from the operative circuits so as to shrink the operative circuits; and these savings themselves then constitute nonproductive, idle money serving only to inflate prices in the secondary markets.