Is spending the best option? (The 1st Fallacy of Economics)

Last time, I told you that spending is crucial for the economy. That is still true, but there is more. Remember, correctness/truth does not translate into completeness.

John Maynard Keynes invented the so-called "Paradox of thrift". The idea directly attached to the concept of "Circular Flow". Pretty much what he said is that being thrifty is good for yourself, but bad for the whole economy. The more you save, the less you spend, the less the economy earns. So he (or the other proponents of his theory) justified it by the following example that:

While broken window does not make you very thrilled, the money does not go to waste (no deadweight) because the repairman will get paid from you. Good for him, and this is how the economy runs.
Spending = Earning.

However! However, assuming that your window is NOT broken, you can instead save the money. Yes, being a little bit thrifty. You can turn the saving into a loan, or invest it to obtain return in the form of interest or capital gain. For instance, you can lend it to your friend at 10% interest rate (a nice return), or you can invest it in various ways such as in stocks and get, hopefully, 50% profit (an even nicer return). Of course, you also have the option to keep the saving in case of emergency, or you can use it to buy yourself a new iPhone!

So by not spending the money on repairing the broken window, you can use the money to generate return (loaning or investing), protect yourself against rainy days (keep saving), or buy stuffs (consuming). All the described options will help you somehow. The first 2 alternatives will most probably increase your future income (increase long-term income), making you richer. The 3rd option will alleviate the burden when, for example, your car broke. The 4th option is nothing but spending. Yes, the same spending, but this time, you spend for something you want/need and still pass the money along to the next person. Not just that, by spending for something you want/need, you will gain satisfaction, improved productivity, and so forth. For instance, buying a new car is not just about classiness, style, and luxury, but it also increases your standard of living and saves more gas! Not to say that the new window glass is not stylish, but wouldn't a brand new car be better?

So I guess spending is not always the best option. Well, it's good, but this is not a win-win strategy because you have to lose something so the others can get something. In contrast, the 4 other options as mentioned above seem to be much more efficient. It is a win-win strategy as the pie is expanded for everyone. You gain, they gain, the whole economy gains. This is much more sustainable in the long run.

In conclusion, spending is a must, but too much is inefficient. Yes, efficiency is important. By allocating your hard-earned $$$ bills (spend it efficiently and effectively) on something that increases your standard of living or resiliency/buoyancy in the future (long run), you are either directly or indirectly contributing to a sustainable economic development, a stable and manageable positive rate of growth that allows for a better welfare improvement.

so this is still rudimentary, just a slight glimpse into economics. It is an easy-to-understand concept, but it must never be underestimated as it is a building block into something bigger, better, much more intriguing, to which we are approaching.