Whether or not a person has savings, he will always have to invest some part of the money he earns for his subsistence, so there can be this investment even without savings.
By investment, I refer to every transaction a person undertakes- By buying groceries, you are investing your money into the grocers, allowing him to continue his trade and make a profit on the side, in turn allowing the grocer to make further transaction, and so on.
I think you completely misunderstand what an investment is. Buying groceries can be considered an investment if you will, under certain conditions... but in yourself, not in the grocerer. For example, I could decide to buy more fruits in order to be more healthy. This is investing in one's health.
Consumption is *not* investment, they are opposites. Check
wikipedia or your dictionary or any financial definition if you want. You can invest in the grocery, but buying food is not that, buying food is comsumption.
If all of us decide that instead of buying that huge LCD display, to save our money, we would drive the LCD vendor out of business, whos bankruptcy would create ripple effects that would affect the entire economy.
Uh... Who the hell sells nothing but LCD displays? You speak as if the bank is a void... The more money you put in the bank, the more money the bank will be able to lend out, the lower their interest rates will be, which will help both businesses and consumers, and therefore consumption will be increased.
When a company wants to make an investment, where does it get this money from? For a vast majority of companies, it is not from savings, but from the expenditures of consumers, the government and or other firms.
How do companies invest? Typically, by credit (because if you were saving up yourself and your project is truly profitable, then surely you would have made more money by starting it earlier and paying the interest on the loan than by waiting out and sitting on your cash). Where do they get their credit? Directly or indirectly, from the banks (even with government aid, because the government doesn't do surpluses either because it follows the same logic, it runs on credit). What determines how much money and at which rate can the banks offer loans for said investments? Quite simply: savings.
Only a fraction of savings goes to companies for their investment purposes. The rest ultimately ends up going to consumption, as banks are quite happy to lend money to people who will use the money to consume goods. Thus by consuming the good, you are providing the company with the funds they need to invest.
That's some !@#$ed up logic. You are saying that consumers buy products with the objective in mind that this will allow companies to invest. What the hell kind of goal is investing for the sake of investing? And why would the consumers care if the companies invest or not?
Companies invest so that they may better sell their products to consumers. Companies invest with loaned money, because their profit rate will be higher than their interest rates (unless they fail at business). Banks will be happy to lend them the money because the interest rates will be higher than the inflation rates. Therefore, everyone is happy: banks get more money off of their money, company gets more sales and therefore profits, and consumer gets a greater product availability, and likely at a cheaper price too.
Therefore, by saving, we are helping the economy just the same as we are by consuming, as we help promote investment. The problem with saving is that governments only have issues with it when the economy slows down and consumption drops, as the consumption-based market fails. The problems that arise from this are not because consumption-based markets are better in every way, but rather because the transition between a consumption-based market and a savings-based market requires radical mutations, and a lot of people are going to hurt during the transition phase. It's the same with any major economical mutation, just think of how bad the ex-USSR had it when transitioning to a market-based economy. Some countries are still not over with the problems.
