...the person who spends all their money and doesn't save contributes much more to the economy...

Have you heard of stories where people are upset that people who save up their money and are fiscally responsible end up in the same position in retirement as someone who spends their money on everything and doesn't save?

I have the thought that the person who spends all their money and doesn't save contributes much more to the economy than the person who doesn't spend.

Am I right?

 

That is not likely to happen and any claims it did happen are usually based on gross misunderstandings.

 

Depends on whether the spender or the saver end up being subsidized by others. Spending money only contributes to the economy when its money that was earned in the economy, because its supposed to be a representation of trading or storing labor and resource. Simply spreading paper around doesnt really contribute anything. What matters (to the economy) is whether that money represents a labor/resource debt that you havnt yet collected (and thus the economy is still benefitting from) or whether you just have a pile of dollars that no one labored to earn... if the latter, the economy would benefit more if you just burned it.

 

I agree wgabrie. Most of us are on the hamster wheel of consumer economics. A worker bee or welfare recipient that immediately spends his check on rent, utilities, etc keeps the money flowing to power the wheel. A wealthy tax cheat takes money out of the system by putting his subsidy (tax loophole) in shelters that are never taxed and never power the wheel. The rest of us now must work harder to keep the wheel spinning. The goofy tax system we have has created this enormous income gap between the haves and have nots. The classic symptom of a failed state is huge income gap between the masses of the working poor and the few top earners. The US is approaching an earnings ratio between the two groups similar to third world failed states.