The utilization of commercial bank credit to finance real investment or government deficits does not constitute a utilization of savings, since bank financing is accomplished through the creation of new money.

From the standpoint of the commercial banks, the monetary savings practices of the public are reflected in the velocity of their deposits and not in their volume. Whether the public saves or dissaves, chooses to hold their savings in the commercial banks or to transfer them to intermediary institutions will not, per se, alter the total assets or liabilities of the commercial banks nor alter the forms of these assets an liabilities.

The means-of-payment velocity of time/savings deposits is zero and the funds are lost to investment, to consumption, and indeed to any type of payment. Such a cessation of the circuit income and transactions velocity of funds, funds which constitute a prior cost of production, cannot but have deleterious effects in our highly interdependent pecuniary economy (it created the phenomenon STAGFLATION).

The much larger question with which we should be concerned, therefore, is the raison d'etre of an institutional arrangement whose benefits to the banks are dubious and which undoubtedly exerts deletereious effects on the financial interemdiaries and the economy.

In the Keynesian system S = I by definition, and in the national income accounts, S=I + (G - T). However, such definitions have little to contribute to dynamic monetary analysis. An expansion of commercial bank held monetary savings deposits is prima facie evidence of a leakage which collects in the form of unspent balances.