Tuesday, June 4, 2013

Chinese Households versus American Households and WSJ's Anti-Capitalist View

WSJ reports:
Chinese households squirrel away around a third of their income, compared with about 2.5% in the U.S.
WSJ, wtth their Keynesian take, consider this a negative for China:
That is tipping China's economy off balance, with too much wasteful investment and not enough household consumption.

 Mises, long ago, set the record straight on this bizarre Keynesian view that spending results in wealth. Mises noted:

The most ingenious technological inventions would be practically useless if the capital goods required for their utilization had not been accumulated by saving.

The only source of the generation of additional capital goods is saving. If all the goods produced are consumed, no new capital comes into being.

Capital is not a free gift of God or of nature. It is the outcome of a provident restriction of consumption on the part of man. It is created and increased by saving and maintained by the abstention from dissaving.

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