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who do not evenly reinvest this capital into the economy Huh? Do most rich people have their money under their mattresses? Rich people try to maximize their r

who do not evenly reinvest this capital into the economy Huh? Do most rich people have their money under their mattresses? Rich people try to maximize their returns as much as anyone else, which typically means a mix of stocks (that's capital for businesses to grow) and bonds (capital for cities, states and nations as well as businesses).

twistedpair 13y ago
Or they tie it up by purchasing the 6th largest island of Hawaii, massive yachts, and mansions that benefit few people other than themselves.
- wj 13y ago
  Yachts and mansions don't build themselves. Jobs are created by their construction. Then that money is spent somewhere else, etc. Multiplier effect. Better that things are bought than the money sitting in a money market account. In regards to the island purchase in Hawaii, it sounds like he is putting funds into improving the infrastructure on the island. (I don't want to get into an argument on whether that is a good or bad thing. Just pointing out that money is being put into the economy by him doing so.)
  - nitrogen 13y ago
    Sure the money is spent paying people to build those yachts, etc., but then the benefits of that labor, once spent, continue to accrue only to the owner. In other words, the yacht builders are paid once; the owner benefits continually from ownership of the finished product.
    - wj 13y ago
      The same could be said of anything including the keyboard I'm typing this comment on.
      - nitrogen 13y ago
        Your keyboard is probably used to produce new value for yourself and others, and represents a very small fraction of the economy. A yacht (to continue the example) is a much larger chunk of economic output frozen in the control of a single owner. I'm not saying nobody should have yachts, just that the argument that the yacht builders were paid only addresses part of the economic effect of concentrated wealth.
        Domenic_S 13y ago
        Yachts don't operate, maintain, or moor themselves.
  - eru 13y ago
    What's the problem with the money market account? The money is not `sitting' there, it's lend out.
    - wj 13y ago
      One less multiple.
      - eru 13y ago
        But also less inflation. So, just let the government print more money.
  - Theodores 13y ago
    We had this 'Trickle Down Effect' with Maggie Thatcher in the UK - it does not work! Looking for a convenient link, the Wikipedia page is rather nifty. Seems people have fallen for 'Trickle Down Effect' many times, although it was called the 'horse and sparrow theory': http://en.wikipedia.org/wiki/Trickle-down_economics http://en.wikipedia.org/wiki/Trickle-down_economics
deleted 13y ago
[deleted]
seiji 13y ago
Do most rich people have their money under their mattresses? Apple has a hundred billion dollars sitting around not doing very much. Landlords in The Bay Area are capturing extra money available to FaceLinkGoogTwitIPO Heads and pocketing it themselves. Most rich people aren't investing in startups. Most rich people are probably corrupt doing borderline, if not flat out, illegal things, and are only interested in hoarding more wealth for themselves.
- dxhdr 13y ago
  "Apple has a hundred billion dollars sitting around not doing very much." Couldn't be further from the truth. Apple runs one of the world's largest hedge funds: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b... Not even going to bother with your other statements.
  - pbreit 13y ago
    Hedge funds have very little impact on the economy. The same dollars would have a much bigger impact if spent or left to consumers.
eru 13y ago
Even money under the mattress would be fine, since money != wealth.
zanny 13y ago
I'm not saying a wealthy person is hoarding money, I'm saying that 1. they reintroduce that money for the purpose of further profit generation (meaing that over time the goal is to accumulate more ownership of productive goods or businesses) rather than exchange that money for goods and services directly. This means you favor 1. non risky ventures and 2. likely growth centers. If in an entire economy you only have this one way wealth ciphon effect, that means that money can be caught in an independent economic loop (especially after legislative manipulation makes some markets no-risk, like mortgages in the early 2000s, or military contracts, or telecom monopolies) of the majority of the population. The wealthy aren't buying your small town trinkets from the general store, or even hiring anyone living in most rural areas. They interact with a small subset of society directly, and in most cases the money they exchange won't end up at your mom and pop shop, it is much more likely to end up back at walmart peppering the rich guys pocket again. It is more about recogition of the game of economics we are all enveloped in. Most wealthy people actively engage and play the game to make a profit. Most people are ignorant to their participation and don't understand that every purchase they make is a power transfer from themselves to someone else. On topic, advertising helps manipulate that exchange in the marketers favor because most ads attempt to illicit an emotional response drive to purchase.

twistedpair 13y ago

Or they tie it up by purchasing the 6th largest island of Hawaii, massive yachts, and mansions that benefit few people other than themselves.

wj 13y ago
Yachts and mansions don't build themselves. Jobs are created by their construction. Then that money is spent somewhere else, etc. Multiplier effect. Better that things are bought than the money sitting in a money market account. In regards to the island purchase in Hawaii, it sounds like he is putting funds into improving the infrastructure on the island. (I don't want to get into an argument on whether that is a good or bad thing. Just pointing out that money is being put into the economy by him doing so.)
- nitrogen 13y ago
  Sure the money is spent paying people to build those yachts, etc., but then the benefits of that labor, once spent, continue to accrue only to the owner. In other words, the yacht builders are paid once; the owner benefits continually from ownership of the finished product.
  - wj 13y ago
    The same could be said of anything including the keyboard I'm typing this comment on.
    - nitrogen 13y ago
      Your keyboard is probably used to produce new value for yourself and others, and represents a very small fraction of the economy. A yacht (to continue the example) is a much larger chunk of economic output frozen in the control of a single owner. I'm not saying nobody should have yachts, just that the argument that the yacht builders were paid only addresses part of the economic effect of concentrated wealth.
      - Domenic_S 13y ago
        Yachts don't operate, maintain, or moor themselves.
- eru 13y ago
  What's the problem with the money market account? The money is not `sitting' there, it's lend out.
  - wj 13y ago
    One less multiple.
    - eru 13y ago
      But also less inflation. So, just let the government print more money.
- Theodores 13y ago
  We had this 'Trickle Down Effect' with Maggie Thatcher in the UK - it does not work! Looking for a convenient link, the Wikipedia page is rather nifty. Seems people have fallen for 'Trickle Down Effect' many times, although it was called the 'horse and sparrow theory': http://en.wikipedia.org/wiki/Trickle-down_economics http://en.wikipedia.org/wiki/Trickle-down_economics

deleted 13y ago

[deleted]

seiji 13y ago

Do most rich people have their money under their mattresses? Apple has a hundred billion dollars sitting around not doing very much. Landlords in The Bay Area are capturing extra money available to FaceLinkGoogTwitIPO Heads and pocketing it themselves. Most rich people aren't investing in startups. Most rich people are probably corrupt doing borderline, if not flat out, illegal things, and are only interested in hoarding more wealth for themselves.

dxhdr 13y ago
"Apple has a hundred billion dollars sitting around not doing very much." Couldn't be further from the truth. Apple runs one of the world's largest hedge funds: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b... Not even going to bother with your other statements.
- pbreit 13y ago
  Hedge funds have very little impact on the economy. The same dollars would have a much bigger impact if spent or left to consumers.

eru 13y ago

Even money under the mattress would be fine, since money != wealth.

zanny 13y ago

I'm not saying a wealthy person is hoarding money, I'm saying that 1. they reintroduce that money for the purpose of further profit generation (meaing that over time the goal is to accumulate more ownership of productive goods or businesses) rather than exchange that money for goods and services directly. This means you favor 1. non risky ventures and 2. likely growth centers. If in an entire economy you only have this one way wealth ciphon effect, that means that money can be caught in an independent economic loop (especially after legislative manipulation makes some markets no-risk, like mortgages in the early 2000s, or military contracts, or telecom monopolies) of the majority of the population. The wealthy aren't buying your small town trinkets from the general store, or even hiring anyone living in most rural areas. They interact with a small subset of society directly, and in most cases the money they exchange won't end up at your mom and pop shop, it is much more likely to end up back at walmart peppering the rich guys pocket again. It is more about recogition of the game of economics we are all enveloped in. Most wealthy people actively engage and play the game to make a profit. Most people are ignorant to their participation and don't understand that every purchase they make is a power transfer from themselves to someone else. On topic, advertising helps manipulate that exchange in the marketers favor because most ads attempt to illicit an emotional response drive to purchase.