Eugen von Böhm-Bawerk v. Keynes on Savings: An Economically Advanced Nation Does NOT Engage in Hoarding

But then why teach the paradox of thrift at all? Not only is it historically unproved, but it is fundamentally flawed. The problem is that Keynesians treat savings as if it disappears from the economy, that it is simply hoarded or left languishing in bank vaults, uninvested. In reality, saving is simply another form of spending, not on current  consumption, but on future consumption. The Keynesians stress only the negative side of saving, the sacrifice of current consumption, while ignoring the positive side, the investment in productive enterprise. The Austrian economist Eugen Böhm-Bawerk stressed the positive side of saving: “For an economically advanced nation does not engage in hoarding, but invests its savings. It buys securities, it deposits its money at interest in savings banks or commercial banks, puts it out on loan, etc.” (1959 [1884], 113).

—Mark Skousen, The Big Three in Economics: Adam Smith, Karl Marx and John Maynard Keynes (Armonk, NY: M. E. Sharpe, 2007), 179-180.