General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhy is money allowed to be removed from the economy???
An economy depends on money to function. The last 50
or so years have trended into GOP laws making it easier to remove money from the economy converting high velocity fluid money into private hands for the purpose of accumulating wealth. Taking profits by liquidating assets into cash and then sequestering the cash in privately held funds, foundations, trusts, security instruments.....strangles the economy contrary to the National Interest. Money has to be regulated back into the economy. Money can be used to build, buy or finance but not accumulated for the sake of creating large cashes of money. Allowing money to be accumulated for the sake of creating large fortunes is no different than damming up a river at the head of a valley to deprive the valley of life giving water. Either spend money or lose it.
rampartc
(5,408 posts)higher corporate taxes would encourage employment, wages, and benefits (all deductible business expenses) over stock buy back.
Prosper
(761 posts)Criminalized
mahatmakanejeeves
(57,468 posts)gab13by13
(21,350 posts)poor people spend their money. In 2018 billionaires who pay their federal, state, and local taxes will pay 23%, the average American will pay 28%. The point of the poster is that the US has the biggest income inequality gap than any nation and it is widening. It is one of the biggest problems our country faces when the top 10% own the vast majority of our wealth.
mahatmakanejeeves
(57,468 posts)Since it's the season, when "It's a Wonderful Life" comes on, please pay attention the scene where there's a run on the savings and loan.
There's not a pile of cash sitting in a room. The money is out there, in the economy, being put to use.
Dams prevent flooding, provide a source of water for irrigation, and make possible the generation of hydroelectric power. Granted, there's a downside, in that existing communities are displaced when the land behind the dam is flooded. The expectation of the people in favor of the dam project is that the benefits will outweigh the costs.
gab13by13
(21,350 posts)I think he may have watched the movie Brewster's million?
Prosper
(761 posts)perpetual trusts and the similar ilk are the problem. If money were fluid and high velocity prosperity would prevail. Income tax revenue would provide quality living for retirees. People would not have to save and payback what they earned in order to live when they retired. My father retired from the coal mines with 100% healthcare for him and my mother provided through United Mine Workers of America. He had a UMWA pension of around $2500 a month and with SS they had a yearly income of around $50,000 a year. He retired in 1976 and lived a full life until his death in 2001. In my mothers final years she deteriorated into dimentia requiring 24/7 monitored living also paid in full by the UMWA til her death. There are thousands if not millions of retired Union Workers living deserved comfortable retirements. There seems to be a perception that the deserved life for the working class is austerity while at the same time the income gap is respected and preserved lest billionaires have their feelings hurt. There is absolutely no reason that trillions of dollars are allowed to be stagnated out of the economy. There is no moral, ethical or fiscal reason to impose poverty to allow massive fortunes to be isolated from the economy. The DOW is over 27000 and nobody has a clue what that means or how to use it.
mahatmakanejeeves
(57,468 posts)That was back in the old days of defined benefits funds. The mine owners put money away in some sort of investment, so that the amount would grow over time. They did NOT throw it in a pile in a locked room.
You'd better take that up with the UMWA pension fund managers. Maybe this will help:
Did you know the UMWA Health & Retirement Funds is a separate organization from the union? If you are a coal retiree and have a question concerning your pension or your retirement health care, please call 1-800-291-1425 or visit umwafunds.org.
Serving United Mine Workers of America retirees for over 65 years
I don't really know which fund is which there. Here's one that's up and running right now:
The United Mine Workers of America (UMWA) Cash Deferred Savings Plan of 1988 ("CDSP" or Savings Plan) is designed to help you meet your financial needs during your retirement years. The CDSP originally became effective on May 1, 1988 and was most recently amended as of January 1, 2010. It came about as a result of the National Bituminous Coal Wage Agreement (NBCWA) of 1988, negotiated between the UMWA and the Bituminous Coal Operators Association, Inc. (BCOA). The CDSP is a defined contribution 401(k) plan, through which you may be able to reduce your annual taxable income by deferring a portion of your Compensation, through payroll deductions, into the Plan as 401(k) Contributions.
Plan name
United Mine Workers of America Cash Deferred Savings Plan of 1988 (CDSP or Savings Plan)
Plan sponsor and address
Board of Trustees
UMWA Cash Deferred Savings Plan of 1988
2121 K Street, NW, Suite 350
Washington, D.C. 20037
(202) 521-2200
Plan Recordkeeper
Prudential Retirement
30 Scranton Office Park
Scranton, PA 18507-1789
1-877-778-2100
....
CDSP Web Sites
....
Prudential Retirement Home Page
Prosper
(761 posts)With the passage of the infamous Gramm 2000 CFMA money began pouring into non productive trading.
Igel
(35,317 posts)Along with the idea that when stocks fell in value actually money was burned somewhere.
Doesn't work that way. Take land. It's a thing. I buy land for $100k, obviously the money vanishes from the economy, right? Just like with derivatives and other stocks or securities?
I mean, if I bought land from you, I know you'd put it in a room and lock the door. It would be out of the economy, right? No way you'd spend that money. It would be out of the economy.
It's the same when we buy things like labor and products. All that money just sits in a room somewhere. Too bad somebody can't think of a way for individuals--the store owners, workers, you if I had bought land from you--to get it back into the economy without government forcing them to do something with it that's "productive" but not what, say, you wanted to do with it. Which is have it sit in a room. A windowless room.
Oh. Wait. There *is* something that progressive citizens could do! They could *spend* they money on services and goods. Who knew. (I think maybe I should patent this idea, it's so novel.)
It's the same with everything else. I have money in a retirement account. It's not sitting in a room. It's being invested. Now, that could be "it's used to buy stocks and bonds already issued." But that money doesn't sit in a room, it goes to people selling that property, and they can spend the money. If it's in a bank, then it's available for loans. It's part of what's allowing the credit card company to pay stores for what I carry away, and the money that the bank lends gets used to buy stuff from people that use the money from the sale to buy stuff.
Even "non-productive trading" takes the money from one person and places it in the hands of another person. It's inherent in the word "trade."
3Hotdogs
(12,390 posts)However, spending creates pollution. Free up that money and you get more spending. That means someone has to make something and it causes pollution.
Prosper
(761 posts)is the functional word. Poverty is unacceptably imposed by the quest to amass fortunes. Human rights cannot be segregated.
Scoopster
(423 posts)Lower interest rates put more money INTO the economy. However all that money is being filtered to the wealthiest people in the world, which only dilutes the value of the money everyone else has access to. The end effect is the same as you're describing tho - the overwhelming consolidation of wealth in parked assets like real estate and investments is strangling the economy for everyone else.
Prosper
(761 posts)The pool of 3,000 companies held about $2.7 trillion in cash as of their latest financial filings
Where is the actual cash stored??????
Igel
(35,317 posts)No, seriously, it's not stored anywhere. Most of it, first off, is numbers on a balance sheet in electronic form.
But the rest of it is invested someplace. Meaning it was used to buy something from somebody else, so the "money" is in the form of assets and the actual cash has moved on. It's not actual "cash", it's going to be held in the form of highly liquid securities. A lot of reporters either were in vocational English programs (sort of like auto mechanics is a vocational engineering program) or are crusaders more interested in the truth of the cross they carry before them to crush the infidels than in anything veridical.
Some cash is in the form of demand deposits, but not a lot, and even then banks don't hold that as cash. Gringott's it's not. That money's available for loans. Except for the increased amount mandated to be kept basically in a locked room as a reserve after the housing/derivatives debacle. That would have been made into law in 2009 or 2010 and that law *did* mandate that money be kept in a lockbox, but it's not just a huge amount compared to the economy overall.
It's like the money in my retirement account. It's not sitting in a pile. It's expected to be used (i.e., "in the economy" to produce income. "Produce" is the same root as "productive"--produce stuff, even income, and it's productive.
mahatmakanejeeves
(57,468 posts)Here's George Bailey explaining to his worried depositors how a savings and loan works:
It's A Wonderful Life Bank Run
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It's A Wonderful Life Bank Run