[imtringued]

From a technical perspective you need deposits but from a practical perspective deposits never leave the system except in the case of a bank run where everyone tries to withdraw their money. If we assume a cashless system then banks can never run out of deposits and deposits never limit loan creation. Saving doesn't increase the number of deposits, it just shifts them around. Borrowing money increases the number of deposits.

https://www.investopedia.com/articles/investing/022416/why-b...

However, saving does have one important function. It creates a hole in the economy and that hole can then be used for investment spending (motivated by a borrower taking on a loan) without causing inflation.

[gruez]

>If we assume a cashless system then banks can never run out of deposits and deposits never limit loan creation

...except for reserve/capital requirements, right?

>However, saving does have one important function. It creates a hole in the economy and that hole can then be used for investment spending (motivated by a borrower taking on a loan) without causing inflation.

In other words, capital isn't free as the parent poster suggests.