When a person puts ten thousand down on a mortgage they spend that money. They indeed spend that money to buy a loan. That money is saved as equity in the home.
Dot coms was a prime example where labor was dismissed. Its value was not based on labor creating a product or service, values at that time were based on who wanted it more. Who thought they could get in low and get out high. When enough people decided to take note that there was no rational behind the value other than that, they got out, and what was left? NOTHING. That is why it crashed. No labor to support it. Dot com was not a government failure, indeed it was an investment failure. Investing in a false value rather than investing in labor.
When you put five thousand dollars in a bank account you get a book with some numbers in it. You bought a book of numbers that you TRUST represents your money. The bank can take that money and loan out ten times that much. Its called fractional lending. The money you deposited is used to make more money. That is, they spend it too. All this spending is the cycle.
The only difference between spending money on a savings account book, and buying a candy bar is that you consume the candy bar and it is gone. While the bank account remains. Now on the other hand, you can spend that money on a car. You can turn around and sell that car at a profit or a loss depending on if you consume it in any way and what the price you paid was. Maybe you even bought it unders its common value.
Do not fool yourself on the term spending, it is far more broad than you give it credit for.
Saving isn't penalized. Profiting from it is though.
You say borrowing only digs a hole deeper. But see what you miss is how you spend that borrowed money. By your comment, a small business loan is just digging a hole deeper. I would argue that you are off base there. I borrow fifty grand to start a business, I have a payment of a grand a month. The business creates a product or service that draws a gross profit of two thousand. I make my payment and I have an addition grand to spend. Wether I spend that on a savings account or on a car or on the business it is addition to the cycle....growth. So long as I make the payment, all is good and growth occurs with labor as its base. National debt is the same thing on a larger scale.
So long as the money spent is not directly consumed but instead used to create more labor and thus more money.
Spending is what makes us grow my friend. Labor creates a product or service. Labor creates more wealth.(again that is the failure that is dot coms). This is exactly why the amount of dollars destroyed and the amount of new dollars made is SECRET and why we operate on a fractional lending platform. Growth with labor as its base and spending as the vehicle to it.
I have to go to a meeting, but I will elaborate more later. When I said we were borrowing into a hole, I meant we are borrowing for spending and consumption not your "spending" as investment. We should probably switch to consumption and investment as our terms.