If you follow the écus in all these alternative uses, you will ascertain that, through the offices of salesmen or lenders, they will go to provide work as surely as if Ariste, following the example of his brother, had traded them for furniture, jewelry, and horses.

Frédéric Bastiat
What Is Seen and What Is Not Seen

It is thanks to a fable of two brothers, one being  prodigal and the other parcimonious, that Frédéric Bastiat exposes the belief according to which immediate spending is the only valuable action for anyone who wishes to benefit from a healthy economic system. It is obvious that fixed capital formation is key to the development of society and not less obvious that savings alone can finance it. As a consequence, savings are necessary and one can have some doubts about the current policies that aim at suppressing savings (how else would you qualify a negative interest rate policy?) in favour of spending (what governments recording public deficits year-in, year-out have been doing for decades now).

What we are seing with Mondor (his name could have been translated “Goldhill” in English: he is comparable to insatiable governments) and Ariste is that savings are displacing spending but not suppressing it (fixed capital formation is a form of spending – and was already so when money was made of gold because Harpagon-style hoarding was marginal). As a consequence, it is absolutely counterproductive to suppress savings and being prodigal is not economically superior.

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