- Who's "we"? Because of trade, "we" includes everybody in the world. If one day with trade with extraterrestrial aliens, then the definition of "we" will have to be expanded to include all sentient trading beings in the entire universe. It also includes all groupings of all sentient trading beings including not only individuals, but businesses, and governments as well.
- Why "more or less"? Things like changes in inventories and delays between production and distribution mean that some years we consume slightly more or less than what we produce, but this effect is pretty small. Also, occasionally some goods are produced that nobody wants (centrally planned economies are exceptionally good at causing unwanted goods to be produced).
- What does it mean to "consume"? I'm using a very inclusive definition here. An average college student can consume a can of beer in a few seconds. On the other hand, it takes about a decade to consume a car and a century to consume a house. Of course, neither durable goods such as houses and cars nor capital equipment are generally thought of as being "consumed", but it's not a bad approximation to consider that about a tenth of each car that lasts ten years and a hundredth of each house that will last one hundred years are consumed each year.
So if we consume what we produce, what does it mean to save? What exactly is being saved? Is it just pieces of paper and/or bits in some bank's computer? Are those pieces of paper and bits part of the same infinitely large pool that the Federal Reserve controls? Is it just some sort of accounting gimmick? Or is there something more tangible that's being saved? Why is saving important at all?
I ask these questions for two reasons. First, I'm intending to write a series of posts on savings and debt and these are the fundamental questions I'll examine. Granted, my intentions and action don't always match regarding my blogging, but these are interesting questions to contemplate anyway. Also, my co-blogger Howard (feel free to jump in anytime) can write about these topics at least as well as I can in case I fall down on the job.
Second, if you hear someone say something like "the savings rate of the United States is way too low" then I suggest you start by asking that someone the above questions. If they can't answer them clearly, then I suggest you don't take them too seriously.