September 13, 2016 at 3:17 pm
#18759
jmherbener
Participant
An addition to money holdings is not consumption. It is plain saving, which as you suggest, is a present good, but not a consumer good.
If a person’s time preference doesn’t change, then his ratio of Saving-Investing to Consumption does not change. With his time preference constant, for a person to fund an addition to his money holdings out of his given income on anything, he must draw the funds out of consumption and saving-investing in the same proportion. If he draws the funds exclusively from consumption, then the ratio of S-I to C would necessarily change.