Why saving makes you poor

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dtaylor84 wrote: »

It's not accurate to say it is immediately worth 1/9th of what it was before (we're not in Zimbabwe). However, he is correct that by depositing £100 in the bank, you are enabling the bank to lend £900 to other customers. Given that only £100 of services have been 'earned' but there is now £1000 in circulation, the £100 that you can spend (incidentally causing this hypothetical bank with only one depositor to collapse) will buy you less than it would before.

OTOH, the other 9 people who borrowed (say) £100 each, can now spend your money. And the bank, which originally owed you £100, is now owed £800.

Ok there can be a time lag as the not all money is not immediatly withdrawn and spent by everyone else on the same item you want.