To go back to the original article quickly (and a rebuttal? I don’t know):
There’s a little theory about how fractional reserve lending is a money multiplier. To put it simply: Saving money (in a bank) is supposed to create more money in the actual economy than does spending it.
However, I’ve seen a big push towards active consumption vs. saving (oftentimes endorsed and overtly encouraged by government policy and mainstream economists) for what…about 6 years now?* Does this mean they no longer believe in fractional reserve lending? I’m honestly confused.
*Edit – Maybe it’s only been 4.5 years. George Bush’s stimulus packages first got me thinking about this. One media quote: “Most economists agreed that tax rebates would immediately lift consumer spending.” If one believes in fractional reserve lending (and its hard not to) why focus solely on the spending aspect?
If the banking system is still functioning, saving should theoretically contribute more money to the economy than spending.
