If everyone saves more at once, the economy can shrink

Saving more feels responsible for any one household in a downturn. But if everyone cuts spending at the same time, total demand falls, businesses earn less, and jobs and wages disappear, so aggregate savings can end up lower, not higher. Keynes used this 'fallacy of composition' to argue governments should spend more, not less, during a recession.

— John Maynard Keynes, The General Theory of Employment, Interest and Money — 1936 — formalized the paradox of thrift
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