Roger writes:
"It is not necessary that the bank hold excess reserves for the effect of
increased saving to be lost to investment. All that is necessary is if
reserves are required against relatively inactive time (saving) deposits as
well as against much more highly active demand (transactions) deposits."

It seems to me that saving often takes the form of retiring debts. Time and
demand deposits may flourish, or may fade; a loan can make them, as a former
loan has made. Legal reserves are not the prime constraint on replacing old
loans with new, but investment opportunities plus collateral security. Let
us keep our eyes on the main chance, lurking behind the veil of money.

Mason Gaffney