Is the following statement accurate? "Creating capital is like depositing money in a savings account. You save during the present in order to have more in the future".

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Yes, this statement is accurate.

Capital is one of the factors of production.  It is those things that are made by people as a means of making other things.  So these are things like factories that have no use for us in the present except that they can make us other things that will be useful.

If a society spends all its money on consumer goods, it has many things in the short term.  However, it is not building up its future capabilities.  If, instead, we divert some of our money to creating things like new technologies that can be used in the future, we allow for economic growth.  We are taking some of our money and putting it towards things that don't fulfill our desires right now but which will in the future be able to make more things than we can currently make.

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