Paradox of thrift

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The paradox of thrift is that while an individual is better off by saving more, if everyone saved more then it might actually hurt the entire economy. If everyone tried to save more than it might lead to less savings due to less income, employment and output.

Bernard Mandeville first introduced this concept in his The Fable of the Bes (1714) and classical economists later picked up on it. It became a central part of Keynesian economics, but now is viewed as a short-run rather than a long-run issue.

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