316

A TREATISE ON MONEY

BK. IV

and financiers, during that period as to the amount ofoutput in the shape of fixed or working capital, andnot on the decisions of the body of individual citizensas to what part of their money-incomes they willsave. When the cost of production of the new in-vestment differs from the amount which individualshave saved out of their money incomes, then certainprice changes must result. When it is a case of in-flation, as in the example just considered, the wealthof the community increases, though no one is de-liberately saving more—the increased wealth comingout of the diminished consumption of individuals dueto the rise of prices. When, on the other hand, a de-flation is in process, individuals may appear to “ save ”,and indeed are able to do so to their own completesatisfaction inasmuch as they are in fact individuallyricher by the amount of their savings, yet in spiteof this there will be no net addition whatever to thenational wealth—the increased wealth of the “ savers ”being balanced by an equal loss of wealth by a sectionof entrepreneurs, and the consumption forgone by the“ savers ” being balanced by an equal increment ofconsumption by consumers generally.

Thus whether the earning and consuming publicintend as individuals to be prudent or imprudentwill not in fact make the slightest difference oneway or the other to the amount of their aggregateconsumption; for so far as current consumption isconcerned, the intentions of individuals to reduce orto maintain consumption will always be defeated,in respect of any effect on the aggregate of currentconsumption as a whole, by an appropriate move-ment of prices upwards or downwards. Thus the neteffect of the prudence or imprudence of individual mem-bers of the public will be seen, not in the aggregateconsumption of the public, but in the price-level andin who owns the increased non - available wealth ofthe community. In short, “ prudence ” by the public