Show Me the Money

952 Words4 Pages
Three years ago the economy was near full employment, people were spending money care-free and the financial markets were roaring along. Fast forward three years and the economy is in an awful recession, consumers’ ability to spend has been evaporated, and the financial markets are among the worst in the last 100 years. Yet I ask a simple question: where is all the money? Some argue it evaporated when consumers extracted equity from their homes and spent it. But they spent it which means it went to someone. What did those people do with it? Some argue banks lent irresponsibly (which they did) to borrowers who could not pay back the loans. But those borrowers spent that money on houses, cars, goods and services. What did those recipients of that spending do with the money? Some argue that Wall Street packaged and re-packaged practically worthless securities and sold them to unsuspecting investors (which they did) for lucrative fees. But Wall Street spent the money on big buildings, airplanes, fat salaries and bonuses. The recipients of the fat salaries and bonuses then spent the money on more cars and houses and vacations and so on. The question still remains: where is all the money? Three years ago all the money floating around the system was enough to keep most people very happy. The population has increased modestly in the last three years, but hardly enough to absorb that much money. The money was not burned, shredded or carted off to landfills. If all the money that was floating around the system was more than enough to keep most people very happy, and all that money is still floating around the system, why are things so different now? Where did all the money go? I can only hypothesize that massive amou... ... middle of paper ... ...ies designed to determine what would encourage them to stop hoarding money. What would they spend money on? What would they invest in? Whom would they lend to and under what conditions? By determining what would encourage the existing money to start flowing again we could potentially tip the scale without the side effect of extraordinary inflation. I will end this with an open call to those entities with enough money to be a player in this game. You know who you are because your net worth is measured in billions. Pick up the phone, get in a plane and get together and talk. The printing press is churning out incredible amounts of money and the cash you are hoarding will be worth less and less as a result. The economy moves in cycles and one way or another we will emerge from this cycle. But it would be nice if we emerge without milk costing $10 a gallon.

More about Show Me the Money

Open Document