In current exposition of Keynes's theory one needs to make a distinction between the accounting identity, where S=I, because of the way C is defined: income not consumed, and the real equilibrium equality of saving and Investment. The increased S would show up as unplanned inventories, and  they would be counted as unplanned I in national income accounts. In the chapter on Notes on the Trade Theory (GT), Keynes described these as surplus stocks and referred to disinvestment or negative investment in the process of downward adjustment in a slump. Hence S=I still holds in one sense. You could call that a mechanical equilibrium, which is obviously unsustainable. The discrepancy will have an effect on income as firms start reducing orders for new goods until their shelves are cleared, with or without reduced prices. Eventually, if incomes keep declining, so will savings out of smaller incomes. The banks' willingness to take risks and lend to investors will depend on what the incentives are for businesses. But that is another matter, and recovery would hopefully lead to equilibrium at full employment. Perhaps this what is meant by the two types of Keynesian equilibrium in the post below.

My apologies if this is not directly related to the main question asked.

Sumitra Shah

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From: Societies for the History of Economics [[log in to unmask]] On Behalf Of Jérôme de Boyer des Roches [[log in to unmask]]
Sent: Friday, October 28, 2011 12:57 PM
To: [log in to unmask]
Subject: Re: [SHOE] S = I?

According to me, in the General Theory, the equation I=S concerns the goods market, not the financial market or banking. It means that the demand for investments goods (I) is equal to the supply of investment goods (S). As I+C=S+C means that the demand for goods (C+I) is equal to the supply of goods (S+C ≡Y). Now, suppose that the propensity to save is increasing (it is the only change in individual decisions), the demand for goods will diminish, just as income, but the amount of saving will not change. Here the functioning of the banking system – granting credit or buying shares through the issuing of IOU or time deposits or bonds - is not concerned.
Now suppose that the banking system is willing to take more financial risks, the prices of assets will increase, the investment will increase, just as income and saving.
In my view, for answering to Robert Leeson question, we could have interest to investigate the processes at work between two Keynesian equilibrium, therefore to refer to the Treatise on Money, not the GT. However, in the 1930 book, saving is not defined at equilibrium.
Best
Jérôme