What can be said of an economic system that becomes more volatile when its citizens become more frugal and financially responsible?

I think the US is in the process of making cash illegal by using a few different excuses. It is precisely the hoarding of cash that makes them nervous. They want to know where the money is at all times. They want access to it. They want to know who spent how much on what.

There is very little true economics left going on in the US. It's all politics now.