"It seems that, according to the RBA, if you leave your money in the banks that’s considered “savings“ but if you keep it in your own possession in the form of cash, that’s considered “hoarding “. Nuts."
And it did not occur to the poster to investigate why? That would have been an elementary thing to do, I would say.
What is money? Well, it is anything generally accepted as a means of exchange. So, if I were a shoemaker and wanted to buy food then I would sell some shoes in exchange for money and then would proceed to buy my food with that money.
This elementary fact leads to an old but out of date economic law called Say's law.
"Definition of Say’s Law Say’s Law, also known as the law of markets, is a principle attributed to the 19th-century French economist Jean-Baptiste Say. The law suggests that “supply creates its own demand.” In other words, Say proposed that the production of goods and services within an economy creates a demand for those goods and services equivalently.According to this principle, there should never be a general glut of goods (i.e., widespread excess supply) in the economy because the very act of producing goods generates sufficient" income to purchase other goods."
THIS MEANS THAT PEOPLE ARE NOT SUPOSE TO WANT MONEY IN ORDER TO KEEP IT UNDER A MATRESS. IF I WANT MONEY IS BECAUSE I WANT TO BUY SOMETHING WITH IT EITHER NOW OR AT A LATER STAGE, WIH THE PROVISO THAT IF I WANT TO SPEND IT AT A LATER STAGE I WILL BE EXPECTED TO PUT IT IN A BANK, AN INTERMEDIARY BETWEEN ME AND SOMEBODY THAT WANTS TO SPEND IT NOW and, in that way, validating Say's law.
BUT IF I AND MANY OTHERS INSTEAD OF DOING THAT WANT MONEY FOR THE SAKE OF HAVING IT STORED SOMEWHERE DOING NOTHING, then Say's law does not apply leading to lots of people becoming unable to sell their goods.
So, savings is Income (money) not spent but available to be spent by means of financial intermediation and hoarding is income not spent and not available to be used by others through financial intermediation.
