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> when you hoard wealth as numbers on a balance sheet rather than spending it, you are actually destroying that wealth They aren't hiding it in their mattress,
by nostromo 11y ago
> when you hoard wealth as numbers on a balance sheet rather than spending it, you are actually destroying that wealth
They aren't hiding it in their mattress, they're investing it.
Invested dollars absolutely do circulate through the economy.
- AnthonyMouse 11y agoThat isn't necessarily true. If they "invest" by buying stocks of other large companies, the money goes to the previous investors in those companies. Those investors may then use the money to buy stocks in other large companies and so on. There is no requirement that the money ever gets back into the real economy.
- stickfigure 11y agoNonsense. This conjures to mind a giant wheelbarrow of paper dollars being pushed around between various buildings on wall street. The money we're talking about is held in banks as deposits. Big purchases means one account number is debited and another is credited, but the money remains in banks. Those bank deposits are used for lending. Money still participates in the economy.
- AnthonyMouse 11y ago> Those bank deposits are used for lending. Those bank deposits can be used for lending. That doesn't mean they are. And banks can currently borrow from The Fed at practically no interest, so the effect you're describing currently doesn't exist. It's also entirely independent of the original money. The money would also be deposited in a bank and used for lending if it was paid to employees as wages.
- nerfhammer 11y agoFed discount window loans are rarely used in practice, generally have a term of 12 hours except in rare circumstances and are fully collateralized. The idea that banks use the discount window routinely to get free government money is malarkey.