These myths have been made popular in the mainstream mainly by Keynesian economists trying to influence public policy.
Myth No. 1: The Key Element of Economy is Consumption
Consumption is, in reality, important in a free economy: especially the freedom of consumers to buy goods in unrestricted markets. However, it is investment (savings) – the total opposite of consumption – that holds the key to long term economic growth.
Consumption-promoting public policies, like low interest rates, do so at the expense of savings. Fewer saving means less investment; and an economy that consumes all its resources without saving or investing, will eventually end up bankrupt.
