Paradox of thrift is a situation in which if everyone saves, they end of losing more money. John Maynard came up with this idea and he thought government should spend money on stimulus program like infrastructure to create jobs for people. For example, in 1920’s during the second Depression, the stock market crashed and the economy dramatically collapsed. When many people start to save their money at the same time, their savings will disappear. Therefore, in order to have healthy economy, money has to go in a cycle. For example, people need to have a good amount of income, in order to have money for savings. To have income, somebody else must spend the money. The more people try to save, the more their income goes down. For an example, Capitol Hill Babysitting Co-up, a co-op in Washington D. C, new members save more scrip than spending, they babysat but not spending scrip. This shows the shortage of demand for babysitting.

http://www.cbc.ca/theinvisiblehand/episodes/2012/08/15/episode-eight-the-paradox-of-thrift/