Day 14 of 365
January 14
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Economics The Paradox of Thrift
The paradox of thrift suggests that while saving money is good for individuals, if everyone saves simultaneously during a recession, it reduces overall demand and worsens the economic downturn. This counterintuitive concept shows how individually rational behavior can lead to collectively harmful outcomes. It was popularized by economist John Maynard Keynes during the Great Depression.
💡 Did you know?
Japan's 'lost decades' of economic stagnation in the 1990s-2000s are partly attributed to excessive saving by worried consumers!
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