Monday, 27 June 2022

"Accumulated savings..."

"Accumulated savings consist of the entire stock of existing capital goods and partially finished goods. We might also add stockpiled partially consumed final goods such as houses and cars as savings. Production processes use up some capital goods and cause capital goods to wear out, which is the consumption of savings.
    "The consumption of savings is a real process. Savings are consumed as stockpiles are used up, energy is burned, and capital goods wear out. These processes are not directly comparable to quantities of cash used in transactions. Because the production of capital goods and the movement of goods to market uses up real resources, these processes can only be funded by savings...
    "Accumulated cash balances are not accumulated savings."

          ~ Robert Blumen, from his article 'Did Real Bills Enable the Growth of Trade'

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