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Consumption = resources consumed today.
Investment = resources not consumed today in order to provide more resources tomorrow.
Money | resources. In a functioning monetary economy, money can command resources.
But simply increasing the prices of - say - houses does not (ignoring for the moment any distorted incentives towards new construction) consume any real resources.
So I think you need another term here:
Consumption: Resources consumed today.
Investment: Resources used in ways that increase usable resources at a later date.
Speculation: Making promises about the allocation of resources that are presumed to be available at a later date.
Speculation does no harm (except inasmuch as it can fuel a consumption binge) until it has to be unwound.
This is not simple nitpicking. There is an important difference between consuming resources that you thought you were investing and oversubscribing future resources. While both result in a shortage of resources at some future date, the former wastes resources and sets unrealistic expectations, while the latter only sets unrealistic expectations.
Malinvestment, in other words, causes real damage to the real economy before the problem becomes apparent - while speculative bubbles cause real damage to the real economy mainly or only during the process of bursting the bubble.
This in turn has important policy implications, in that the damage done by a bubble can still be averted (almost) entirely by the time the bubble is discovered, whereas the damage done by real malinvestment is at least partly a done deal by the time you realise that the jig is up.
Friends come and go. Enemies accumulate.
Such calculations do not and cannot obviate the need to make political decisions about risk. Risk assessment, like discount rates, is inherently a partly political decision - and that's doubly true for systemic risk. But hopefully such calculations can make those political decisions more informed. And certainly, they can remove the plausible deniability of "nobody could have predicted."
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