No, it still does apply. The problem is that when everyone (or at least a lot of people) hoards, it drives down aggregate demand. Demand doesn't magically app

No, it still does apply. The problem is that when everyone (or at least a lot of people) hoards, it drives down aggregate demand. Demand doesn't magically appear from nowhere. Who are the banks going to lend to when no one's buying or selling? When businesses and individuals both hoard money, there's just less business to be done. You may have read stories of banks not lending despite the injections of cash into the system! What do you do when that happens? The problem with the hoarding scenario is that if you know that a greater than X percent of people are hoarding, then you better too because the economy will do worse for it, and you better have a hedge when that happens. This is called a deflationary spiral. With fiat currency, the central banks can attempt to discourage hoarding by printing money. However, the amount of money destroyed by the recent financial crash has nearly outpaced the Fed's ability to print money.