Does spending create prosperity?

Does spending create prosperity? It's a weird idea when you think about it. Spending is consumption. Consumption uses stuff up. How could it create prosperity? If anything, the causation is reversed–it is prosperity that creates spending.

The Keynesian logic, though, is pretty appealing. In times when there is high unemployment, spending should create demand. Any kind of spending. So if consumers don't want to spend, then government can stimulate the economy. And demand should create jobs...

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Published on September 13, 2010 12:09
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