> No, this is false. Banks do not "loan out deposits". See [0] for an explanation why this is false. > As long as the bank believes the the risk adjusted retu

> No, this is false. Banks do not "loan out deposits". See [0] for an explanation why this is false. > As long as the bank believes the the risk adjusted return on your stream of payments will exceed the obligation of their IOU, and as long as they have a sufficient amount of capital pledge to cover a percentage of the loan (usually a few percent, again depending on the riskiness of the loan. A non-collateralized business loans requires more of a capital pledge than a collateralized loan) they will go ahead and issue the IOU and create a deposit in your name at the bank for the amount of the loan. Then you can use that deposit at the same bank to pay for the investment you want. Banks create money out of thin air (but not willy-nilly). The amount of money banks create is not constrained by how many deposits they have -- rather the lending of money creates deposits. This is false, the amount is constrained by regulation and the the regulation requires that loans are made up to a limit of a multiple of deposits on hand. > The sum total that an economy spends on investment is equal to the sum total that ends up being saved, regardless of how much people in the economy wanted to save. You, as an individual, can of course choose to put a portion of your income in the bank instead of buying some good, but that decision deprives the seller of the good of their income. So while individuals can choose how much of their income to save, their individual decisions in aggregate also determine how much income they earn. If too many people try to save at the same time, total income is reduced and they fail to save. So whether or not the individuals in an economy succeed in reaching their savings targets depends on whether a sufficient amount of investment occurs or not. So you better hope that there is enough investment happening in the economy to meet everyone's savings goals otherwise some people will fail to meet their targets. (Laid off people tend not to achieve their savings targets.) None of this contradicts what I was saying. > The ability to pay is determined by your income, which falls if everyone tries to save at the same time. Only when measured from a baseline where there is no savings. > Merely abstaining from spending money and letting your financial savings sit idle in a bank deposit does not cause anyone to purchase an investment good, because banks don't lend deposits and deposits don't create loans (see above). You keep repeating this falsehood but even in a fiat system where money is created out of thin air the amount loaned is tied to the amount deposited by regulation. Other things you have said are quibbles and do not address my points. Savings is defined as deferred consumption and is necessary in order that there be surplus value available to invest. This is basic economics and is true as a matter of identity (if you consume everything there is nothing left to be invested). [0] https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking