No. The opposite of saving is spending. You can spend on capital as well as consumption. Inflation only devalues cash, i.e. money you keep in your mattress. You can avoid inflation by either consuming or investing, both of which help keep the economy humming along.
Maybe 'spending' is a better word, yes. However, 'consumption' isn't entirely inaccurate. Investment is the production of capital goods, and the production of capital goods involves consumption.
Well, yeah, you can't create something from nothing. But that's not exactly a deep insight. All economic activity involves consumption if you want to cast the net that broadly.
The point is:
> The idea that people need to be encouraged to consume (consumption being the opposite of saving) I don't think is supported by economic theory.
People absolutely need to be encouraged to be productive. That's the whole point of an economy, to encourage people to produce things that others want in exchange for other people producing things that they want.
Honestly, how could anyone possibly not understand that?
The whole point of an economy is NOT to encourage people to produce things. The point of producing is to satisfy a demand for consumption, and individuals choose their level of consumption according to their preferences and budget constraints. They don't need to be encouraged to consume. That doesn't make any sense.
> The whole point of an economy is NOT to encourage people to produce things.
I guess we'll just have to agree to disagree about that. Maybe things are different where you are, but where I live most people expect to be compensated for their labor, and investors expect at least a shot at a positive ROI. But if you want to work for free, by no means allow me to discourage you.
> They don't need to be encouraged to consume. That doesn't make any sense.
You're right about that. But that was not what I said. I said that they needed to be encouraged to produce, not to consume.
> I understand it fine,
Manifestly not. You couldn't even write three sentences without losing the plot.
You said: "Hoarding/saving for long periods of time is bad because it discourages people from taking risks by putting resources to productive use"
And later you added that by "saving" you meant specifically "not spending".
Then "taking risks by putting resources to productive use" is just a fancy way of saying "producing"
So, you're saying that people not spending is bad because it discourages people from producing.
In a market economy, the optimal level of production is the level that satisfies the desired level of consumption. If people want to save more, and therefore consume less, and as a result we also produce less, that's not bad. That's how the economy is supposed to work.
No. The opposite of saving is spending. You can spend on capital as well as consumption. Inflation only devalues cash, i.e. money you keep in your mattress. You can avoid inflation by either consuming or investing, both of which help keep the economy humming along.