The paradox of thrift is the idea that saving leads to lower aggregate demand, which will ultimately mean people have less money to save. It is part of the push for continuous spending to keep the economy flowing smoothly.
Great job explaining the paradox of thrift Abby! One critique against the paradox thrift is that money being saved doesn't just disappear. Tons of people invest their money in banks or finance markets, where other businesses are able to take out a loan of it to start their own thing, which ultimately increases economic growth, instead of slowing it down. The paradox of thrift focuses more on the short term goal, like in a recession, but when you zoom out and think long-term, saving creates bigger opportunities for technological growth and higher income rates down the road.
Saving through banks works around the paradox because your money can be used and accessed through the bank by others while you save.