I asked the MMTers if it was true that when people save or refrain from "spending", that shrinks the pool of funds so the government must inject more fiat funny money into society.
Tom Hickey explains:
What do you think will happen if saving erodes the amount of money for consumption? Let me guess. "Prices will decline."
Well, we know what actually happens. Prices don't decline fast enough to offset, so unplanned inventory builds, businesses cut back production and lay of workers so that unemployment rises.
When commenter Paul wrote: "There is another option, tax or confiscate all excess savings and spend it back into the economy.
Yes, and in a saner system this would be standard operating procedure in the case of gain through rent-seeking, from which most of the saving in excess of reasonable provision for future need (hoarding) arises.
They know this to be true because MMTers know how our monetary system works. And because they know how the monetary system works, they can determine EXACTLY what amounts people should be allow to save in excess of reasonable provision for future need, right? These conclusions follow logically and directly from noticing that the government can create all of the “dollars” it wants to out of thin air. That's logical, right?