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I've never understood this claim. I presume rich people don't shove money under their mattresses. They invest the money in companies, loan the money to companie
by natrius 15y ago
I've never understood this claim. I presume rich people don't shove money under their mattresses. They invest the money in companies, loan the money to companies, or put the money in banks that loan money to companies and individuals. How is that sitting on money?
- drumdance 15y agoExactly. Even buying treasury bonds is helpful because much of the money pays federal employees and the military, and the rest goes to the private sector in the form of contracts.
- Tycho 15y agoNot to mention, the recent financial crisis stems to a large extent from banks being 'under-capitalized,' i.e. not enough rich people just leaving their money in an account.
- snowwindwaves 15y agoor the banks lending out every cent they do have
- sp332 15y agoCurrently, it's hard for people to get loans. So if rich people buy bonds, the banks won't lend out much of the money. Interest rates are so low, banks wouldn't make much money on the loans, so there's not much incentive to make more loans. And since the inflation rate is hovering around 0, the bank isn't really losing money by just sitting on it, There just isn't any incentive for the banks to make a lot of loans.
- matwood 15y agoCurrently, it's hard for people to get loans. It's hard for people with bad credit to get loans, as it should be. People who are unlikely to pay the loans back should not be given them in the first place. In fact, many people who are in trouble now are blaming banks for giving them the money. So which is it? Should money be given freely to anyone or should creditors be selective with who they give loans?