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The Fallacy of Consumption is a form of weak Statism (weak in that it isn't required by the state, but often suggested by it) that encourages Consumerism and discourages saving.

Many people believe that by spending their money they stimulate the economy and encourage trade. This is Statism because of the notion that people should spend their money 'for the common good of the economy'. Tradespeople favour this notion because they want customers to buy their products, and governments favour it because, in the short term, it encourages high employment and general prosperity. But does it do the same in the long-term?

If someone saves their money, they most likely put it in a bank. The banker does not sit idle on this money - he lends and invests, encouraging businesses to develop in new, profitable areas and employ more workmen. This is more conducive to long-term growth of an economy.

If someone chooses to save their money in actual precious metal or material such as gold or silver, he increases the demand for these materials and hence, if many people make a similar decision, the size of these industries.

If someone chooses to spend their money immediately, and other people choose to spend it immediately on similar things, then more tradespeople will be attracted to the markets in which they spend their money. But these tradespeople will require funds from banks to establish themselves and expand. Hence, they require that some men choose not to consume, but to save. Men of both types are needed to sustain long-term growth of an economy.

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