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Apple now holding more cash than USA

bbc.co.uk

41–50 of 130 posts

Re: Apple now holding more cash than USA

#41

"the country has an operating cash balance of $73.7bn" How is this so? I thought the annual budget was in deficit. Quite significantly, in fact. And not to mention the country has a massive debt. Although I understand how that may not affect the operating cash balance. The headline definitely seems like it could be used as a sound bite for corporate tax increase commentary.

A compulsive gambler, already hundreds of thousands of dollars in debt, goes to a loan shark to borrow another five hundred bucks. He now has an operating cash balance of five hundred dollars, while still having a net worth of minus six figures.

Re: Apple now holding more cash than USA

#42

"the country has an operating cash balance of $73.7bn" How is this so? I thought the annual budget was in deficit. Quite significantly, in fact. And not to mention the country has a massive debt. Although I understand how that may not affect the operating cash balance. The headline definitely seems like it could be used as a sound bite for corporate tax increase commentary.

This number (the $73.7bn) is almost entirely meaningless. If you look at it from first principles, the US federal government does not need to maintain any accounts at all, since it is the entity that controls the monetary system. When they want to spend, they can just credit bank accounts directly; the money doesn't need to come from somewhere.

However, partly to make the payment systems run in a more unified manner, and partly for simple historical reasons, the Treasury does maintain accounts with a balance in them. Since the flows in and out of these accounts are important for maintaining the inter-bank interest rate, any movements there are closely coordinated with the open market operations of the Fed. In the end, the number in those accounts is basically whatever happens to satisfy the current monetary policy best.

To sum it up, the comparison in the article is void of meaning.

For understanding these kinds of things I found the writings of Modern Monetary Theory very interesting. See e.g. here: http://pragcap.com/resources/understanding-modern-monetary-s... There is also an entire chapter in the book "Understanding modern money" by Randall Wray devoted to the accounting contortions that the Fed and Treasury do while running the payment system.

Re: Apple now holding more cash than USA

#43
post #16

What will happen to the American if the congress does not vote on the rise ?

No one can say for sure. It's a doomsday scenario that no one is really prepared for. The only thing anyone can say with any certainty is that the next president of the USA will be a Republican, because that's what this is all about. Destroy the economy, blame the incumbent, and scoop up the next election.

Not really. One thing we can be grateful for is that neither party really wants a default, because neither party is confident that it would be the electoral beneficiary.

It might seem that Republicans would get the benefit, but this fact in itself provides a reason for people to blame Republicans if things go bad, since they'll assume (as you appear to be doing) that they caused the default in order to get the benefit. This makes it pretty much a wash -- if bad things happen, both sides will blame the other and we can't quite see in advance how it'll all play out in the court of public opinion.

Re: Apple now holding more cash than USA

#44
post #6

Earlier quoted context omitted.

Note that those big multinational corporations can't move money made outside the country to back home in the USA without incurring an absurd ~30% tax on top of whatever other taxes they paid whoever already. Word is Apple has been pushing for an amnesty so they _can_ bring their money home; until then, that money earned outside the US stays outside the US.

Last time we had an amnesty, all the money that flooded back in to the USA wasn't reinvested the companies or used to grow the economy, it just want straight into bonuses and dividends.

And those don't get income taxed at around the higher income brackets of over 30%? Wont a corporation just be able to write off bonuses as employee compensation expenses anyway?

Re: Apple now holding more cash than USA

#45
post #41

"the country has an operating cash balance of $73.7bn" How is this so? I thought the annual budget was in deficit. Quite significantly, in fact. And not to mention the country has a massive debt. Although I understand how that may not affect the operating cash balance. The headline definitely seems like it could be used as a sound bite for corporate tax increase commentary.

A compulsive gambler, already hundreds of thousands of dollars in debt, goes to a loan shark to borrow another five hundred bucks. He now has an operating cash balance of five hundred dollars, while still having a net worth of minus six figures.

Then I agree that the number is pretty much meaningless. The government can easily increase their operating cash balance simply by incurring more debt. It's the debt, and the deficit that seem most relevant to my untrained mind.

In fact, if you want to compare with a corporation, I'd compare the entity's deficit as a percentage of its revenue.

Re: Apple now holding more cash than USA

#46
post #31

Earlier quoted context omitted.

You're ignoring the part where we were discussing a tax holiday. When executives hoard money overseas for a decade and then bring it back tax-free, they are basically depriving the government of the tax revenue that money transfer should have brought in. Beyond that, there's not a lot of evidence for the notion that execs making more money is a net gain for the economy. It seems intuitive that more money in the hands…

If you distribute a million dollars across the entire US economy, that's roughly 30 cents per person, and it's likely to be spent on some chewing gum or a very small amount of food. It dissipates before it has a chance to grow. If concentrated, the million dollars can be applied to things that are only possible when money is concentrated, like doing research and development, investing in large construction projects,…

You make the assumption that tax money goes into the population's pockets instead of government-funded projects.

Your argument is easily reversible to raise taxes across the board in order to concentrate the money into government projects rather than having it spread around.

Re: Apple now holding more cash than USA

#47
post #38
post #18

Earlier quoted context omitted.

I'm not sure I follow. Distributing profits to employees (bonuses) or to investors (dividends) is bad? The employees and investors now have more money to buy things or to re-invest. I'm not an economist, but I think that when money flows from A to B, the economy does grow. It doesn't matter if that flow is to employees as bonuses, investors as dividends, or to vendors as business expesnses.

Distributing profits via bonuses and dividends in the US without US taxes being collected on that money is bad, yes. It's not like corporations pay a very high tax rate, even on the rare occasions that they do actually pay their full tax obligation, after all. And the other point, of course, is that money that goes directly into the savings accounts of the already-rich does not tend to stimulate the economy very well…

> Distributing profits via bonuses and dividends in the US without US taxes being collected on that money is bad, yes.

Since when are bonuses and dividends not taxed?

Re: Apple now holding more cash than USA

#49
post #41

Earlier quoted context omitted.

A compulsive gambler, already hundreds of thousands of dollars in debt, goes to a loan shark to borrow another five hundred bucks. He now has an operating cash balance of five hundred dollars, while still having a net worth of minus six figures.

Then I agree that the number is pretty much meaningless. The government can easily increase their operating cash balance simply by incurring more debt. It's the debt, and the deficit that seem most relevant to my untrained mind. In fact, if you want to compare with a corporation, I'd compare the entity's deficit as a percentage of its revenue.

The government can easily increase their operating cash balance simply by incurring more debt.

Except, and this is the whole reason that we currently have big problems, the Government currently can't legally incur more debt, unless Congress passes an increase to the debt ceiling. So cash-on-hand is currently a serious issue.

Re: Apple now holding more cash than USA

#50
post #20
post #18

Earlier quoted context omitted.

I'm not sure I follow. Distributing profits to employees (bonuses) or to investors (dividends) is bad? The employees and investors now have more money to buy things or to re-invest. I'm not an economist, but I think that when money flows from A to B, the economy does grow. It doesn't matter if that flow is to employees as bonuses, investors as dividends, or to vendors as business expesnses.

> I'm not an economist, but I think that when money flows from A to B, the economy does grow. Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy. When you consider that under normal circumstances 30% of that money would flow into…

You're wrong.

As long as those money are flowing, it helps the economy. The only instance where it wouldn't is if it disappeared from the market.

This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.

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