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or through the means of their capital or their land.

"From these premises I have drawn a conclusion which appears to me evident, but the consequences of which appear to have alarmed you. I had said - As no one can purchase the produce of another except with his own produce, as the amount for which we can buy is equal to that which we can produce, the more we can produce the more we can purchase. From whence proceeds this other conclusion, which you refuse to admit - That if certain commodities do not sell, it is because others are not produced, and that it is the raising produce alone which opens a market for the sale of produce." ("Letters to Malthus," p. 2)

Saving for investment instead of spending on consumption throws Say's Law out of kilter. If we don't cut consumption and save in order to invest, however, where is the money to come from? As Dr. Harold G. Moulton, then-president of the Brookings Institution explained in his 1935 monograph, "The Formation of Capital," a properly-run commercial banking system has the ability to create money without inflation if new money creation is restricted to investment in projects that pay for themselves out of future profits.

This was, in fact, where the vast bulk of investment capital came during the century from 1830 to 1930. Money was created by commercial banks for investment in capital projects that paid for themselves out of the future stream of income generated by the production of goods and services. This does not eliminate savings from the investment process. It does, however, shift savings from the past to the future, so the equation that savings equals investment remains valid.

Obviously, if you can create money "out of nothing" (in reality, out of the present value of a reasonably-certain future stream of income from a project), you do not need to cut consumption in order to save and then invest. The rich don't have to worry about having their wealth taxed away in order to redistribute, and the poor don't see their purchasing power eroded through inflation.

There is, however, one remaining factor to consider in developing a sound solution to the current series of economic crises. That is, how are people who currently lack ownership supposed to acquire ownership of the capital that will generate effective demand for them when the value of their labor declines on the free and open market?

This was the question addressed by Louis O. Kelso and Mortimer J. Adler in the two books they co-authored, "The Capitalist

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