Recent reports are that banks, businesses and private individuals are sitting on mountains of cash that is not being spent. What’s with this?
It’s called SAVINGS....
Are you kidding with this question??? Where have you been?
Too much government and no confidence in our leaders.
Oh, and corporate profits are at record levels, but that's being done by eliminating jobs.
No one is going to move not knowing what might lurk around the next corner.
As soon as business senses that the Gov't is on their side...that not only will they will Gov't not throw up some heinous new rule but will move to LOOSEN regs on their behalf money and jobs will flow.
It's really that simple.
He portrays these people as anti patriotic and greedy if they don't volunteer to give their money to him to be thrown down the nearest sewer.
By asking this question, it sounds as if you might agree. This is basic American capitalism and you should know this already. Do we smell a troll?
They know that the deflationary forces aren’t done yet.
In a deflation, cash is King. The movement of money flow, called velocity, slows, and people sit on cash because there doesn’t appear to be a better place to keep it. Low interest rates also encourage this. And low yields on UST.
Just like in 2008, staying is cash is wise IF another market crash is on the horizon. Without the next QR3 being certain, people are staying OUT of the market and IN cash, to be safe.
Once the next QE is in swing, the inflationary forces will be let lose once again, grinding up the little people with less and less room to be able to support themselves.
Until the next deflationary scare.
Unless the US dollar collapses, then all bets are off.
So businesses are sitting on cash. So what. What do you expect them to do? Give it to you?
Suppose their customers are bankrupt or out of business, what then?
Should they buy more raw materials, make stuff, and sit on finished goods when no one is buying?
Try this: open a bakery in the desert, 100 miles off the road and try to sell apple pies before they rot.
Individuals are paying down debt and now saving and maybe sitting on cash because they may need to survive.
It boggles the mind how many people lack critical thinking skills and common sense.
They are not. Much of that “cash” is actually credit they do not want to spend.
And they are wise.
This is a debt-based depression, not an inventory recession.
Too much debt is the core of the problem.
For the cash that businesses are holding on to, they are very wise to do so. The lack of income from high unemployment, low consumer spending, and insane governmental fiscal policy will provide business with a cash buffer that they can use to stay in business and pay workers when income drops.
Costs for businesses are already on the rise. They have absorbed this extra cost (margin compression) to a great degree until now. But now they have no choice but to pass it on to the consumer (inflation), as WalMart has stated recently. Having some savings enables them to do this, and that has helped the economy.