It's Not Aggregate Demand, Stupid

If you were given $1,000, would you spend it immediately or place it in your bank account for future consumption?  How about if you were given $1 million?  One trillion?  At what point would you douse your pile of newly acquired pile of greenbacks in lighter fluid and set them ablaze, as all your possible wants have been satisfied? Human demand is infinite.  As economist Ludwig von Mises theorized nearly a century ago, people act in order to achieve ends.  If all wants are satisfied, then man does not act. If you have had the pleasure of listening to mainstream economists in the higher reaches of academia or on the New York Times editorial page, you have been told that the current economic slump in the U.S. is due to a lack of aggregate demand.  The conventional wisdom goes like this: consumers, who are deleveraging large amounts of accumulated debt, have cut down on spending.  Businesses see a lack of demand and are reluctant to invest in new...(Read Full Article)

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