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The money they're talking about isn't peoples income, it's companies buying stock. The people they buy it from turn around and invest it elsewhere. Likewise, th
by knowaveragejoe 7y ago
The money they're talking about isn't peoples income, it's companies buying stock. The people they buy it from turn around and invest it elsewhere. Likewise, the "40%" saved isn't sitting in a vault somewhere, it's also invested.
- pixl97 7y agoUnless that company is also sitting on billions in cash reserves.
- nightski 7y agoMaybe that should be the focus of attention vs stock buybacks.
- edoceo 7y agoNot literal cash, it's in accounts, accounts that pay interest, interest earned from investment
- XorNot 7y agoOr in shell companies in the Cayman's waiting for the next payroll tax holiday.
- compiler-guy 7y agoEven cash reserves end up loaned to others. Unless the company puts it under a mattress. Those reserves typically end up I low risk short term bonds and the like. Low risk, but not just sitting.
- tomatocracy 7y agoThe only 'saved money actually doing nothing' scenario I can think if is when it gets deposited in a bank who then turns around and hold those funds at the central bank because they have nothing else to do with it. Central banks in many currencies these days offer negative deposit rates to discourage that behaviour and thus to the extent it happens it tends to only be over a very short period of time. Of course it doesn't mean that investors/banks who receive the money reinvest it in the same country - if there is a dearth of opportunities in eg the US and Europe then this type of activity may result in increased investment in emerging markets.