Savings and Spending in the Economy 1.0.0

Many mainstream economists argue that while individuals can save, an economy taken as a whole cannot because one person's spending is another person's income.

This line of reasoning seems to defy logic and begs two questions: 

• Can economies accumulate savings?
• Can total spending in an economy exceed total income?

This PowerPoint deck shows the traditional model which suggests that an economy cannot accumulate savings and total spending will equal total income. It then proposes a simple revised model which suggests that (a) an economy can accumulate savings and (b) total spending can exceed total income.

If you have studied economics, the slides will take 5 minutes to read through. Although you may have to brush up on how the banking system creates credit since this topic is typically absent from economics courses. Please take a look, and send your constructive criticism to tom [at] spencertom [dot] com

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