Consumers Don't Cause Recessions

[Kevin_Kennedy]

The circular-flow diagram is a very misleading model of the economy. It leads us to think that output of finished consumer goods can immediately rise and fall with "spending." This framework would hold if there were no capital goods, meaning that all consumer goods and services were produced immediately, as workers took gifts of nature and produced the finished item on the spot.

Consumers Don't Cause Recessions - Robert P. Murphy - Mises Institute