CH. 7 THE MEANING OF SAVING AND INVESTMENT 83

savings. Moreover, the savings which result fromthis decision are just as genuine as any other savings.No one can be compelled to own the additional moneycorresponding to the new bank-credit, unless he de-liberately prefers to hold more money rather than someother form of wealth. Yet employment, incomes andprices cannot help moving in such a way that in thenew situation someone does choose to hold the addi-tional money. It is true that an unexpected increaseof investment in a particular direction may cause anirregularity in the rate of aggregate saving and in-vestment which would not have occurred if it hasbeen sufficiently foreseen. It is also true that thegrant of the bank-credit will set up three tendencies—(1) for output to increase, (2) for the marginal pro-duct to rise in value in terms of the wage-unit (whichin conditions of decreasing return must necessarilyaccompany an increase of output), and (3) for thewage-unit to rise in terms of money (since this is a fre-quent concomitant of better employment); and thesetendencies may affect the distribution of real incomebetween different groups. But these tendencies arecharacteristic of a state of increasing output as such,and will occur just as much if the increase in outputhas been initiated otherwise than by an increase inbank-credit. They can only be avoided by avoidingany course of action capable of improving employment.Much of the above, however, is anticipating the resultof discussions which have not yet been reached.

Thus the old-fashioned view that saving alwaysinvolves investment, though incomplete and misleading,is formally sounder than the new-fangled view thatthere can be saving without investment or investmentwithout “genuine” saving. The error lies in proceed-ing to the plausible inference that, when an individualsaves, he will increase aggregate investment by an equalamount. It is true, that, when an individual saves heincreases his own wealth. But the conclusion that he