Kevin Hoover wrote: "Pigou argues that, but for leakages to imports, the multiplier would have to be infinite, and apparently can't credit such nonsense. He apparently doesn't imagine the possibility of leakages in the form of a propensity to save." Adam Smith (/WN/, 1: 359) explains that "What is annually saved is as regularly consumed as what is annually spent, and nearly in the same time too; but it is consumed by a different set of people. That portion of his revenue which a rich man annually spends, is in most cases consumed by idle guests, and menial servants, who leave nothing behind them in return for their consumption. That portion which he annually saves, as for the sake of the profit it is immediately employed as a capital, is consumed in the same manner, and nearly in the same time too, but by a different set of people ..." J.S Mill (/Works/, 2:70) reaffirms the point: "The word saving does not imply that what is saved is not consumed, nor even necessarily that the consumption is deferred: but only that, if consumed immediately, it is not consumed by the person who saves it. If merely laid by for future use, it is said to be hoarded; and while hoarded, is not consumed at all. But if employed as capital, it is all consumed; though not by the capitalist." And before Mill, Malthus also stated that "No political economist of the present day can by saving mean mere hoarding" (Quoted in Blaug 1996, 161). Alfred Marshall in the /Pure Theory of Domestic Values/ restates the above meaning of saving when he writes, "The whole of a man=s income is expended in the purchase of services and of commodities. It is indeed commonly said that a man spends some portion of his income and saves another. But it is a familiar economic axiom that a man purchases labour and commodities with that portion of his income he saves just as much as he does with that he is said to spend. He is said to spend when he seeks to obtain present enjoyment from the services and commodities which he purchases. He is said to save when he causes the labour and the commodities which he purchases to be devoted to the production of wealth from which he expects to derive the means of enjoyment in the future" (Quoted in Keynes 1936, 19). So, short of importing IOUs or financial assets, how does saving constitute a "leakage" from an economy's expenditure stream? BTW, I'm with Rod Hay on the difference between Pigou's multiplying principle and the Kahn-Keynes multiplier analysis. The latter is driven by consumer spending, hence Keynes's heavy reliance on the marginal propensity to consume (because he thinks saving is a leakage), without first asking what creates the means to make the purchases for consumption. The former is driven by production, which may be initiated by a monetary injection. James Ahiakpor