Isn't the FIRE person just delaying it's consumption? At some point the saved up money will be spent, therefore I wouldn't expect it to have a huge negative impact on economic growth
I think generally no: FIRE adherents are planning to retire early (the “RE” in FIRE) and expect to spend less over their lifetime than a standard American working that same level of job/income for 40 years instead of 10 or 15.
FIRE, or any retirement strategy tend to rely on smart investment to generate income, and investment only makes the difference between how much worker is getting paid and how much they generate.
If we all become full time investors, who do we invest in?
There'll always be generational differences. FIRE is no different from normal retirement, only it's taken to greater lengths.
Normally people in generation X spend the first 40 adult years producing goods & services, partly consumed by themselves, partly exchanged for credits with old retired people of generation X-1.
After generation X is done with this working period, they retire, now holding credits. They exchange their credits for goods & services produced by generation X+1.
And so on and so forth.
FIRE simply shifts the lengths of the working periods and generations. Instead of working from 20 til 70, it may be from 20 til 60, or 50, depending on how successful you are in accumulating credits.
The credit system ensures that this doesn't really turn into a big issue. After all, if people are hugely successful accumulating credits and stop producing, and the population of producing people becomes small enough, then the exchange rate of goods&services to credits will worsen. The demand of goods & services will be lower than the supply, such that goods & services cost more credits. This is a natural incentive for people to start producing again, as the value of their accumulated credits goes down, but the value of them spending their time earning credits goes up.
Of course credits is money and the worsening exchange rate is inflation.
In short, we could all FIRE (i.e., every generation can retire at some point). But we cannot all FIRE at extremely early ages. The FIRE movement is essentially exposing the 'true' retirement age possible if we were more deliberate and intentional about our production & consumption. In a world where we all consume as much as we can, it makes sense we may need to work many years till an old age. A world in which we consume much less means we can produce much less, and thereby work less and retire sooner (or retire partially, i.e. parttime work).
It's not delaying but also reducing it significantly - the FIRE person lives on 1/3 a typical income and saves the other two over the course of a compressed career. Typically they retire once they've saved 25X their yearly expenses and then draw down at a rate of 4% a year, putting any excess capital gains towards their portfolios to offset inflation.
So consumption is reduced by 60% over the course of a lifetime, which by most metrics would shrink the economy by a similar amount - of course, most FIRE people also keep being productive after retiring, so it's probably not so straightforward to account for everything.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...