Exactly. Codexon, saving just causes another, ostensibly wiser, form of spending. If you save your money in a bank, then they will lend it out where it will be spent, usually on capital goods (whatever that means anymore, or ever meant). If you save it by buying some stock, you drive up the stock's price, making it more a better deal for the company to issue more stock (and spend the proceeds in building their business). Same thing with bonds.
Think about this. If everyone saves all their money, who is going to do the spending? How is anyone supposed to earn money?
The only people you can trust to earn money from are the people who aren't saving all their money.
If you save your money in a bank, how are you and the bank supposed to make interest if everyone starts saving and no one takes out a loan??? Your savings rate will drop towards 0 in a situation like this. If companies act in the same manner, why should they issue any stock??? What is the benefit for them if they prefer to save up and use their own cash instead of share holder cash?
What happens in a situation like this is that the stock prices don't grow at all as you can see here in Japan for nearly 20 years:
