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Showing posts with the label intended investment

How Intended Investment Can Fall Short of Investment, Personal Version

I caught and salted 100 cod fish last week. Here is how I allocated them: 20 I planned to eat. 60 I planned to sell on the market to finance other consumption.* 20 I planned to set aside as a store enabling me to work on capital goods in the future, e.g., a better fishing net. Here is what actually happened: 20 I ate. 50 I sold on the market, because, at the price I planned to sell, 50 was all that was demanded. 30 I set aside. My intended investment was 20 cod fish. But I wound up, due to unexpected market conditions, actually saving 30 fish. S = I, always. But sometimes I can include the unintentional piling up of inventories. That might be a problem, depending on whether you think the economy is more dominated by negative or positive feedback effects. * Mainly the high-blood-pressure pills I must take due to eating so much salt cod.