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For example they always invest every available wealth they have (or they burn money for cooking or dump money into the sea to make artificial islands)?

In some sense that money is not returned to the economic system.

In other words what are the effects besides the money supply decreasing?

I am asking this to satisfy my curiosity.

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    $\begingroup$ I heavily edited your question to make it more general. If you disagree with my edit you can change it back. $\endgroup$ – Giskard Aug 9 '15 at 5:59
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If one person decides to reduce his lifetime consumption by (say) \$100, then someone else (or many someone else's) is made richer by \$100. For example, that $100 might be left to a single heir. Or at the other extreme, the person might decide to burn a \$100 bill in which case the benefits are spread to everyone who holds money.

When people are richer, they can decide to consume more, or to work less, or some of each. Because income elasticities of labor supply are empirically quite small, you'd expect most of this to come out in increased consumption.

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  • $\begingroup$ The questions asks what happened if all billionaires decreased their spending. If the money is left to the heir, it would imply that the heir also wouldn't spend the money. $\endgroup$ – FooBar Aug 13 '15 at 16:15
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I have hesitated to put my answer as an answer or comment. First of all, you could get interesting insights by looking at Thomas Pikkety's seminal work (even if he got some severe critics by a large group of economists.) To tell very succintly, he suggests to tax heavily ultra billionnaires as he thinks that inequality will finally cause social tensions etc.

I think your question depends on how to spend. Spending on luxury goods or spending on investment ? If they stop to invest in real sector and put their wealth on financial equities etc, it will surely affect the whole economy. If these billionnaires have some big factories, it will also affect unemployment rate and so on.

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