STRAIGHT TALK
MARK BARNES: Society can steam ahead by investing some of the money just floating around
‘Idle capital doesn’t build things. Nonetheless, many top corporations store huge amounts of cash’
Cash! Can you ever have too much of it? Yes, you can. Money was introduced as a medium of exchange, a convenience, around 600BC. I’m not sure money was ever intended to be a store of wealth, and, for the most part, it isn’t. Most central banks adopted monetary-easing policies following the financial crisis of 2008. Governments lowered sovereign interest rates, primarily to weaken the local currency (to promote exports); and lower the returns on excess cash, so that people would stop hoarding it in uncertainty and start investing it in the real economy, which would build assets and create jobs. The trouble is that everyone played the same game, so these sovereign strategies had only limited success. The whole process is reversing as we now enter a phase where interest rates are expected to increase.
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