Paradox of Thrift?

Question

this is a really confusing passage. can someone please explain it?

"So here’s what happens; savings is a leakage out of the flow of goods and services. If everyone increases

their autonomous savings, what they're doing is reducing demand, which means that businesses are going to cut back

production and income is going to be falling.

Eventually, what happens is that savings has to be equal to investment.

That’s our condition for macroeconomic equilibrium. So if investment is autonomous, that means, if it’s a fixed

amount, then what has to happen is the amount by which we have increased autonomous savings has to be the

amount by which the economy reduces savings based on income.d Income is going to shrink until savings falls to be

exactly equal to the level that it was before everyone tried to save more.

This means that since savings equals

income, our efforts to try to increase our aggregate savings are fruitless and the thing that’s accomplished is a redct in GDP"

Answer 1

If you have a given level of income under consideration say $100 and nothing is saved, then all of this $100 goes to spending/consumption.   If out of that given level of income we chose to save say $10, then by necessity, our spending will be reduced to $90.  We are not spending as much, which means businesses are not selling as much.  They may lay workers off or pay workers less, all of which can lead to a decrease in total spending or total demand.    If savings equaled investment, then what was saved by households, could be picked up and spent by firms on things like plant, equipment and machines--called investment.