Savings do not necessarily produce investment and can instead produce hoarding

Evidence

Keynes showed that decisions to save and invest were temporally separate, and that savings did not necessarily lead to investment. Saving could just as easily lead to hoarding and reduced consumption. The job of the state was, then, to alter the investors’ investment expectations by raising prices so that profits could be made, thereby making it rational to begin hiring workers again and, by doing so, to get out of the slump. Rather than savings leading to investment, consumption via workers’ paychecks ultimately drove investment. Today we call this demand-side economics. — Mark Blyth, Austerity, 342

Categorization

• DEFINE: Defines the temporal separation of saving and investment and grounds demand-side economics in a named mechanism.
• XREF: connects to: Keynes’s 1929 pamphlet first articulated that saving does not drive investment — Mark Blyth, Austerity: The History of a Dangerous…, 333; Keynesian theory holds that idle savings rather than spending retard capital accumulation — Clara E. Mattei, The Capital Order: How Economists…, 1683; Austrian economics interprets corporate cash hoarding in recessions as rational fear of state expropriation — Mark Blyth, Austerity: The History of a Dangerous…, 395 (+4 more)

Broader Connections

• Keynesian theory holds that idle savings rather than spending retard capital accumulation #corroborates (0.85) — Clara E. Mattei, The Capital Order, 1683
• Austrian economics interprets corporate cash hoarding in recessions as rational fear of state expropriation #complicates (0.80) — Mark Blyth, Austerity, 395