Tuesday, October 01, 2013

Are the wealthy and business hoarding their money because too many restrictions or not enough market or both?

This article makes a lot of sense. If the wealthy were to invest more in job creating activities, rather than just hoarding money, the economy would work better.

I'll add that people on the right tend to blame government and environmental restrictions. These things can prevent business expansion so the wealthy and corporations just sit on their money; rather than investing it in expansion. That could be true, but do we want to repeal restrictions? Some restrictions are there for good reasons like for safety and protecting the environment. It's one of the factors living on a limited planet.

Liberals tend to say that the lack of demand for products prevents business from investing in increasing the supply of goods and services. Workers can't afford to buy things anymore. Less middle class means less market demand. Also a valid point. To some extent, less demand can be good for the environment, but hard on an economy that is dependent on growth. An ultimate goal is to grow the economy in a way that does not harm the environment. At least grow the economy to keep up with population growth, but try to curb population growth as well.

Also, I might add, when the wealthy just hoard their money, they often put it in so called "safe haven" investments. One of the primary safe havens is US Government debt. So the rich are investing in US government debt and then many of them are turning around and complaining that the government is borrowing too much money. Go figure.

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