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0 pointsSpooky235y ago0 comments

Hoarding wealth is bad for the economy, as it lowers the velocity of money.

See: https://fred.stlouisfed.org/series/M2V

Our current policy is to paper over bank liquidity or other problems by printing money. Big institutions and the mega-rich are hoarding massive quantities of cash. The economy as a whole would be better off if billionaires were doing stuff with their money rather than hoarding shares.

0 comments

missedthecue5y ago

Do you think big corps convert their retained earnings to cash and stuff it under their mattress?

Spooky23OP5y ago

“BigCorp Ireland, Ltd” buys a bunch of treasuries.

missedthecue5y ago

So they're lending money to the government, who spends it.

All BigCorp Ireland LTD has is a brokerage account full of ISIN codes.

Spooky23OP5y ago

That doesn’t sound like a typical business argument. We could more efficiently get the money in the government treasury by skipping the corporate middleman and taxing it.

How are those tbills delivering value to the shareholders?

1 more reply

nickpp5y ago

You do realize that nobody keeps that cash on hand, right? It’s in banks where it gets lent out, thus participating and contributing to the economy.

"Hoarding" is nonsense.

Spooky23OP5y ago

How are the nearly $2 trillion of bank reserves at the Fed contributing? That’s a significant portion of the total money supply.

Most of the corporate cash isn’t in equity funds, it in US Treasury debt. Apple holds >$50B of treasury securities, for example.

The low inflation monetary policy has some benefits, but combined with our ass-backwards tax system also makes for strong disincentive to do anything with excess cash.

nickpp5y ago

Money in the government coffers is spent and used by the government. Again, a good thing (as far as government spending can be called a good thing, of course).

throwaway20485y ago

It plowed into low productivity assets like real estate, in an endless cycle of increasing real estate costs.

The effect is almost identical.

j / k navigate · click thread line to collapse

0 comments

missedthecue5y ago

Do you think big corps convert their retained earnings to cash and stuff it under their mattress?

Spooky23OP5y ago

“BigCorp Ireland, Ltd” buys a bunch of treasuries.

missedthecue5y ago

So they're lending money to the government, who spends it.

All BigCorp Ireland LTD has is a brokerage account full of ISIN codes.

Spooky23OP5y ago

That doesn’t sound like a typical business argument. We could more efficiently get the money in the government treasury by skipping the corporate middleman and taxing it.

How are those tbills delivering value to the shareholders?

1 more reply

nickpp5y ago

You do realize that nobody keeps that cash on hand, right? It’s in banks where it gets lent out, thus participating and contributing to the economy.

"Hoarding" is nonsense.

Spooky23OP5y ago

How are the nearly $2 trillion of bank reserves at the Fed contributing? That’s a significant portion of the total money supply.

Most of the corporate cash isn’t in equity funds, it in US Treasury debt. Apple holds >$50B of treasury securities, for example.

The low inflation monetary policy has some benefits, but combined with our ass-backwards tax system also makes for strong disincentive to do anything with excess cash.

nickpp5y ago

Money in the government coffers is spent and used by the government. Again, a good thing (as far as government spending can be called a good thing, of course).

throwaway20485y ago

It plowed into low productivity assets like real estate, in an endless cycle of increasing real estate costs.

The effect is almost identical.

j / k navigate · click thread line to collapse