1/1/23, 2:50 PM W5: Paradox of Thrift – ECON102 D005 Fall 2022

https://myclassroom.apus.edu/d2l/le/72745/discussions/topics/632699/View 1/3

W5: Paradox of Thrift


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Week 5 Discussion Post 4

An interesting paradox called the “Paradox of Thrift” arises when households
become concern about their future and attempt to increase their saving. As a
consequence of such action the overall economy will suffer. Explain. Do you
agree with this assessment?

Your initial discussion posts must be submitted by midnight, Day 3 and then your
responses to 2 of your classmates’ posts by have to be submitted by midnight,
Day 7.

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Week 5 Discussion post 4
Jonathan Malcolm posted Jan 1, 2023 3:07 PM Subscribe

Hello class,





1/1/23, 2:50 PM W5: Paradox of Thrift – ECON102 D005 Fall 2022

https://myclassroom.apus.edu/d2l/le/72745/discussions/topics/632699/View 2/3




The paradox of thrift which is people gaining concern for the future so they look to save all

the money they can. This will definitely have a negative impact on the overall economy. If

you think about all the money you would be saving, that money is someone else’s lost

income. Small businesses would be suffering to stay afloat, and yes while you would be

keeping more money for yourself it would hurt the economy. I understand you can’t spend

everything you make, while that’s not good for yourself but not spending any of could even

go as far as causing these smaller businesses to go under and create rises in the

unemployment rates.

“John Maynard Keynes, who published his influential work, The General Theory of Employ –

ment, Interest, and Money, in 1936, noted saving can ultimately be detrimental to the

economy because of the paradox of thrift. This theory argues that if everyone individually

cuts spending to increase saving, aggregate saving will eventually fall because one person’s

spending is someone else’s income.”

This can also cause such a snowball effect because if I’m saving all my money, causing

others to lose out on income. They will in turn have to save their money to make up for the

lost income of me saving my money and so on and so on. Causing a much bigger effect on

the economy as a whole.

Vermann, E. Katarina. “‘Wait, Is Saving Good or Bad? the Paradox of Thrift.’” Economic
Research – Federal Reserve Bank of St. Louis, May 2012,





Bernard Vinson posted Jan 1, 2023 10:57 AM Subscri

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