Tag Archive for Saving

How Saving Grows the Economy

Piggy Bank
This article has been reprinted with permission from the Ludwig von Mises Institute. The original article contains images from Irwin Schiff’s comic book which are worth a look.

How Saving Grows the Economy
By Dan Sanchez

Back in the 1980s, Irwin Schiff, anti-tax activist, political prisoner, and father of free-market pundit Peter Schiff, wrote a marvelous comic book titled How an Economy Grows and Why It Doesn’t, which teaches economic principles through a light-hearted story.

The comic starts with three islanders — Able, Baker, and Charlie — who live off of fish, which they catch in the sea. They have no tools to aid them, so they must fish with their bare hands. Fish, to the islanders, is a consumers’ good: something that is used to directly pursue their goals (in this case, the goals of satisfying hunger and not starving). But, fish can only be a consumers’ good when it is ready for consumption. The fish do the islanders no good while they are still swimming in the sea. So the islanders must engage in production. They must produce the product of “fish on a plate,” which is, to be exact, the true consumers’ good, and not simply “fish” per se.

Interest Rates Too High?

The Federal Funds Rate from 2004-2014.

The Federal Funds Rate from 2004-2014.

We would argue that it is Minneapolis Fed President Narayana Kocherlakota who is high, after his latest publicized comments on interest rates. The idea that interest rates are too high, after six years of being near zero, would be amusing if it weren’t coming from a regional Fed President.