The more I save the more bank deposits are available for banks to lend and spur further growth. This is false, but it's an easy mistake to make because it's su

The more I save the more bank deposits are available for banks to lend and spur further growth. This is false, but it's an easy mistake to make because it's such a common misconception about how banking works. Banks do not lend out deposits in any possible interpretation of those words, and they do not require deposits prior to making loans. This is apparent because banks create deposits in the act of giving a loan. This doesn't mean that banks can just make loans willy-nilly. They do have to satisfy regulatory capital constraints. However, deposits are not capital. Still, by far the greatest determinant of loan-making is the credit-worthiness of potential borrowers. On this side, saving is a negative: It reduces the potential revenue of businesses, which makes those businesses less credit-worthy. There's a difference between "saving money" and "not spending any money at all, whatsoever" This is only a quantitative difference. If you think of the circular flow of money inside the economy, then any kind of saving represents a leak. If this leak is not balanced out by an in-flow of new money from loans, the circular flow will diminish. So you might be able to make a "one-time withdrawal" from that circular flow into your savings account, but in the long run, such withdrawals are not sustainable unless offset by somebody else. That much is clear. To summarize: If you successfully save at a greater rate for a longer period of time, then somebody else necessarily must save at a slower rate (or borrow at a greater rate).