What happens if people are so focused on obtaining money that they hoard it for long periods of time, rather than investing it and helping the economy?
Assume everyone took their money home and stuffed it in a pillow. Since that cash is no longer in banks, that money cannot be loaned out. If banks have less of a supply of money, we should see the price of money (interest rates) go up. It is also worth mentioning that the price of money is very important. If the government were to make it artificially lower, despite the people hoarding money, then investments would be undertaken that are only seem profitable (a good use of our resources) but in reality are wasteful. Eventually many projects undertaken in this era of artificially low interest rates will have to be stopped, and the people working on them let go. If people are hoarding their money because of uncertainty in the economy, the best course of action is to let that uncertainty build up savings until individuals become secure enough to start participating in spending/investing it.
I feel that this scenario can almost not happen, because I believe that people nowadays realize that stuffing your money under the mattress is actually the worst thing you can do. You have to make your money work for you, it's a simple fact of life. This combined with the fact that bank accounts are insured up to $250,000 or something like that leads me to believe that this scenario is as unlikely as I am to complete a Spanish assignment on time. However, it certainly is an interesting thought.