Chapter 11 Post and Reply

The Paradox of Thrift is the idea that if everyone saves their money at home that the economy will get worse. If everyone saves their money and does not put it into a bank, that means less money is being put into the economy. Less money in the economy means that businesses lose their income source and have to cut down on prices, wages, and employees. Overall, while saving is needed by some individuals, if every individual saved more than they spent, then the economy would fall. This fall could be saved by those of other countries who aren't saving, by buying exports, giving a sense of "income" to the country. Overall, the value of saving is held in the eye of the beholder, but has the possibility to create unintended issues for the economy.