<i>it makes no difference if it&#x27;s one person putting a million dollars or a thousand people each putting one thousand dollars in the bank. The result in either case is that the bank can lend out a million dollars to someone starting a new venture.</i><p>This is wrong because it focuses solely on imaginary numbers floating around. It&#x27;s absolutely true that we can play any game we want with numbers in a bank computer.<p>However, a worker can either be building a new factory or they can be making a purse. The former is investment while the latter is consumption. If we encourage investment we get more of the former, while if we encourage consumption we get more of the latter. The constraint here is real resources, not money.<p><i>I could probably be convinced that it would be a good idea to make all investment and savings tax free provided that all dividends as well as any amount liquidated was taxed as income.</i><p>This discourages investment and favors immediate consumption. Again, read Scott Sumner: <a href="http:&#x2F;&#x2F;www.themoneyillusion.com&#x2F;?p=28842" rel="nofollow">http:&#x2F;&#x2F;www.themoneyillusion.com&#x2F;?p=28842</a><p>This also discourages re-allocating investments to their most productive uses.