I lied when I said I was done posting on this topic. But now I’m truly done. If the following doesn’t convince you folks that Wenzel/Major Freedom got off on the wrong footing, I don’t know what else would.
Major Freedom in one thread writes: “Investment and consumption, THOSE are commensurable concepts. They are both stock concepts…”
But then in the other thread he writes:
Income is flow, because it compares (say, yearly) revenues to (say, yearly) expenses over a time period.
Consumption spending is stock, because it is just the act of spending not for the purposes of making subsequent sales. Sure, you can look at consumption events over time, just like you can look at cash balances over time. But so what.
Investment is flow, because it is spending for the purpose of making subsequent sales.
I think we should all take a breather and collect our thoughts. I have now provided a quotation from Mises establishing that (a) savings is “the surplus of goods produced over goods consumed,” and (b) people can choose to save by enlarging their cash balances. I have provided a quotation from Rothbard explicitly defining saving as “the amount by which a person’s income exceeds his consumption.”
My definition is also the one used in any financial economics or macroeconomics textbook, and it is consistent with standard accounting (though accountants talk about “expenses,” not “consumption”).
Finally, as I just showed above, Major Freedom in one thread thought it advantageous in his argument with me to classify investment as a stock concept, yet in the other thread he decided to thwart my point by classifying it as a flow concept.
There is nothing more I can say on this. Best of all, if you agree with me (and Mises and Rothbard and accountants and econ textbook writers) that saving = income – consumption, and that a saver can invest in higher cash balances just as surely as he can invest in, say, T-bills, then you can still be a libertarian. Scout’s honor.