[logicchains]

>The money saved doesn't just sit under a mattress, it becomes the stock of capital in a country (plus and minus capital imports and exports and so on), which is then invested in projects (startups, infrastructure, etc.) that need capital.

Money doesn't become the stock of capital; money isn't capital. Money is a proxy for value. Capital is created by consuming less value than is produced, so the non-consumed value can be invested, which savings can achieve even if the money itself is not invested. This is because saving/hoarding essentially reduces the money supply, thus increasing the value of money - transferring purchasing power from the saver to people currently spending money. If I create x dollars of value, then burn the money I recieved in compensation, I've essentially gifted the value I produced to other currency holders, which they can consume or invest.

The US experienced deflation through much of the 19th century, yet saw higher growth rates then than in the 20th century. For instance, from https://www.investopedia.com/ask/answers/040715/were-there-a... (don't have time to find a more formal source): "The period between 1873 and 1879 saw prices drop by nearly 3% per year, yet real national product growth was almost 7% during the same time." And overall "the price level (the average of current prices across the entire spectrum of goods and services produced in the economy) was actually 50% higher in 1800 than it was in 1900." So clearly it's possible to have strong economic growth during deflationary times.

[ucaetano]

Money is a proxy for capital when used for productive ends. So, yes, savings generate stock of capital.