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While the now $2 millionaire would not be likely to spend that extra million on food and clothing they would be extremely likely to invest that money in a varie
by jonreem 9y ago
While the now $2 millionaire would not be likely to spend that extra million on food and clothing they would be extremely likely to invest that money in a variety of financial instruments, making that capital available in the market so it can be put to good use. Investing does help inject value into the economy and drive growth - "sitting on it" would require literally keeping it in cash in a bank, which no sane person would do due to inflation.
- milcron 9y ago> they would be extremely likely to invest that money in a variety of financial instruments, making that capital available in the market so it can be put to good use This improves the supply-side of the economy, but doesn't do anything to stimulate demand for products. Today, lack of demand is a larger problem than increased output. The labor share of GDP has been decreasing since the 70s, and its starting to hit levels where people are having trouble affording as many goods. Although investing is a good use of funds, arguably redistribution (a type of demand-side stimulus) would be more helpful today.
- Density 9y agoJuicero and their ilk prove that there's too much capital looking for somewhere to go. We don't need this much capital floating around, we need peoples' lives to improve so they stop killing themselves with heroin.
- njarboe 9y ago"sitting on it" would require literally keeping it in cash in your safe. If put "in a bank", unless you mean a safety deposit box, is (to some approximation, in theory, in the not to distant past, maybe) reinvested by the bank. That is how the bank makes money.