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Thanks, this is an interesting idea that I had not considered. Isn't it the case that those large stockpiles of "cash" are actually invested, though? e.g. I ha

by javert 12y ago

Thanks, this is an interesting idea that I had not considered. Isn't it the case that those large stockpiles of "cash" are actually invested, though? e.g. I have heard of Apple sitting on a ton of cash, but presumably it is not literally just sitting in the bank. Even if it is, the bank is investing it and thus is able to pay interest. Though it might be the case that the interest only really amounts to inflation, and the bank is really just preserving the value by putting the cash into more stable assets. I'd be intereted in any thoughts of yours on this. Another thing, off the top of my head. I think that if your point were true for the economy overall, the economy would not be growing and it would not be possible to get greater-than-inflation returns from the stock market overall. Both of those things seem not to be the case, any thoughts?

bsder 12y ago
> I have heard of Apple sitting on a ton of cash, but presumably it is not literally just sitting in the bank. It's literally sitting on their balance sheet, and, consequently, even a bank can't actually use it for investments. It's really bad. > I think that if your point were true for the economy overall, the economy would not be growing and it would not be possible to get greater-than-inflation returns from the stock market overall. Stock market returns are not particularly connected to the economy in any useful way anymore (stocks are more vehicles for speculation than real ownership of a company). I wouldn't use it as a proxy. A better proxy would be auto traffic numbers. In California, CalTrans traffic engineers were forced to sign non-disclosure agreements about traffic numbers because they were so horrifically down during the bust. The economy is growing some, but slowly. The fact that California managed to balance a budget and quit cutting helps. An extra million people with health insurance helps twofold--more people in healthcare professions and better productivity from people at the bottom of the ladder. Gradual minimum wage increases will help get people buried at the bottom of the ladder a little. The very interesting question to me is whether the ACA will unleash small businesses. A LOT of people in their 40s and 50s stayed buried in jobs they hated simply because they were terrified that they couldn't get health insurance if they left. Those people are now free to move--I think this is going to be THE legacy of the ACA.
djur 12y ago
A lot of potential investment is parked in sovereign debt right now. The Treasury has no trouble selling debt at essentially zero interest. There's plenty of supply out there, but not enough demand.

by javert 12y ago

bsder 12y ago

> I have heard of Apple sitting on a ton of cash, but presumably it is not literally just sitting in the bank. It's literally sitting on their balance sheet, and, consequently, even a bank can't actually use it for investments. It's really bad. > I think that if your point were true for the economy overall, the economy would not be growing and it would not be possible to get greater-than-inflation returns from the stock market overall. Stock market returns are not particularly connected to the economy in any useful way anymore (stocks are more vehicles for speculation than real ownership of a company). I wouldn't use it as a proxy. A better proxy would be auto traffic numbers. In California, CalTrans traffic engineers were forced to sign non-disclosure agreements about traffic numbers because they were so horrifically down during the bust. The economy is growing some, but slowly. The fact that California managed to balance a budget and quit cutting helps. An extra million people with health insurance helps twofold--more people in healthcare professions and better productivity from people at the bottom of the ladder. Gradual minimum wage increases will help get people buried at the bottom of the ladder a little. The very interesting question to me is whether the ACA will unleash small businesses. A LOT of people in their 40s and 50s stayed buried in jobs they hated simply because they were terrified that they couldn't get health insurance if they left. Those people are now free to move--I think this is going to be THE legacy of the ACA.

djur 12y ago

A lot of potential investment is parked in sovereign debt right now. The Treasury has no trouble selling debt at essentially zero interest. There's plenty of supply out there, but not enough demand.