It might be interesting to see how the rise in this cash hoarding correlates with the tendency to stop paying dividends to stock owners and instead focus on growth in stock price.
Why Are Corporations Hoarding Trillions?
251–260 of 412 posts
Re: Why Are Corporations Hoarding Trillions?
#252Earlier quoted context omitted.
This is the ultimate problem with "trickle down" economics. Capital doesn't drive growth. Lack of capital limits growth, but excess capital doesn't generate additional growth. Demand drives growth and 35 years of stagnant wages (wages are basically where they were in 1981) have put a chokehold on growth. This is why you have the seemingly incongruous effect of high taxes encouraging growth and low taxes stifling it.…
That's not "trickle down" economics, which is not actually a real thing at all. That's a nonsensical political term that the Democrats seized upon during Reagan's "supply side" economic policy; which has beginnings much earlier than Reagan, and likely older than Jean-Baptiste Say's formulation. There isn't an idea that alone "capital drives growth," that's an idea that Keynes came up with by misreading Jean-Baptiste…
The fundamental concept of "trickle down" -- legislate to further enrich the already-wealthy, and those less well-off will become more well-off as an indirect effect -- is way older than Reagan. William Jennings Bryan bashed on it in his "Cross of Gold" speech in 1896.
Re: Why Are Corporations Hoarding Trillions?
#253Earlier quoted context omitted.
Because the US needs the businesses, not the other way around.
Are you serious? Where could Apple establish itself if not for the US? Or Google? Or Facebook? The government comes first, as a guarantor of civilization. Everything else comes later.
There's this whole continent of pretty civilised countries just to the east of US.
Re: Why Are Corporations Hoarding Trillions?
#254Earlier quoted context omitted.
Are you serious? Where could Apple establish itself if not for the US? Or Google? Or Facebook? The government comes first, as a guarantor of civilization. Everything else comes later.
There's this whole continent of pretty civilised countries just to the east of US.
And in those countries too, businesses need the government.
Re: Why Are Corporations Hoarding Trillions?
#255Earlier quoted context omitted.
That's quite funny. If the US blocked a company from it's market, that company would collapse practically overnight. The US is the most profitable market in the world with the EU running not too far behind. Think about Alibaba--it's profit is about connecting Chinese sellers to the profitable markets in the US and EU--not about connecting to other Chinese suppliers.
But the US can't just block offshore companies from its market without absolutely destroying its economy. What do you think would happen if the US suddenly decided that no company can do business in the US without paying taxes to the US for their offshore profits?
They'll pay the taxes. Also grumble for a month maybe, then go quiet.
Re: Why Are Corporations Hoarding Trillions?
#256Earlier quoted context omitted.
There's this whole continent of pretty civilised countries just to the east of US.
And in those countries too, businesses need the government.
And?
I think you're missing the point here, US double taxing foreign income would put everyone else at an insane competitive advantage.
Re: Why Are Corporations Hoarding Trillions?
#257Earlier quoted context omitted.
But the US can't just block offshore companies from its market without absolutely destroying its economy. What do you think would happen if the US suddenly decided that no company can do business in the US without paying taxes to the US for their offshore profits?
They'll pay the taxes. Also grumble for a month maybe, then go quiet.
I don't think you realise just how much money that'd be.
Re: Why Are Corporations Hoarding Trillions?
#258If the companies spent their savings, rather than hoarding them, the economy would instantly grow, and we would most likely see more jobs with better pay. The article makes it sound like these dollars are somehow being removed from the economy. If they're put in a bank, the bank loans it out to someone else. If they buy treasury bills, the government then takes the money and spends it. Even if all this money was conv…
> If they're put in a bank, the bank loans it out to someone else
Except, that's not happening. The fed is paying banks to not lend out money.
Re: Why Are Corporations Hoarding Trillions?
#259My theory is that when the QE rounds started and trillions of dollars were pumped into the economy (major inflationary red flag), the velocity of money dropped like a rock (major deflationary red flag) as a natural reaction. EDIT: The reason is likely tied to the fact that interest rates sat on the bottom for the last 5-8 years and holding money was just as valuable as investing it. See the article[1] on the St. Loui…
The increase in excess reserves is not mysterious. The Fed starting paying 0.25% on them in 2008 (now 0.50%) while other interest rates were near zero.
Eventually some minor crisis will trigger spending, all this excess cash will hit the system like a floodgate, and we will have an inflation spiral (because suddenly hoarding will be a bad idea). And the irony is that the ethical justification for the fed is that it is supposed to be countercyclical, and thus 'good for society'.
Re: Why Are Corporations Hoarding Trillions?
#260Earlier quoted context omitted.
Is this so bad? Falling into something of a European-type rut with permanent 8-12% unemployment and modest GDP gains? I remember the 90s. Everyone was buying shit non-stop. What kind of life is that? Sure it created jobs and growth but to the ludicrous end where we refused to accept the gravy train was ending. I remember Bush 43 pleading for Americans to "go back shopping" the black friday after 9/11 when the writing…
"Is this so bad? Falling into something of a European-type rut with permanent 8% unemployment and modest GDP gains? I remember the 90s. Everyone was buying shit non-stop. What kind of life is that?" It was a pretty fabulous kind of life. People felt rich, there were shiny new buildings going up everywhere, the government's budget was running at a surplus, there was a general feeling of optimism and hope for the futur…
But obviously the '90s were not sustainable. What we are going through today is the payback period (with interest) for Greenspan's economic policies.