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If your putting it in the stock market or loans, doesn't it increase the supply of such things, thus making the return less and making people have to work harde
by woolvalley 8y ago
If your putting it in the stock market or loans, doesn't it increase the supply of such things, thus making the return less and making people have to work harder as a result if 'everyone' did this?
As far as I can see, it only applies if the cash is inert in a bank account not being loaned out.
- sjg007 8y agoLoan out is fine. The issue is that aggregate consumption and thus demand goes down. People decide not to take vacation etc... not buy the iPhone or not upgrade their car.. things like that. Lower demand means higher prices too.
- Gibbon1 8y ago> not being loaned out. The $64,000 Question is what is the money being loaned out for. If it's bidding up the price of stocks, bonds, and real estate then it takes a leap of faith to assume that will lead to actual productivity improvements.
- simonh 8y agoIt depends on the demand for investment. If there are loads of potentially successful companies starved for resources, more spending on stocks and loans could increase total returns linearly, or perhaps even more. If there’s a glut of money for investment, then that’s a different story.