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Enough people are worried about the investment environment that approximately $50T ($50,000,000,000,000) is being held as “cash”. It isn’t $50T in dollar bills, but as liquid assets that aren’t expected to appreciate. Investors have been accumulating funds because they have little confidence in conventional investment options (which is a sign of distrust within the ultra-wealthy in the markets), and little confidence in the near term economy (which is a sign of expected instabilities in the world.) That is more than triple the US GDP that has been removed from the economy, which is one reason why growth and innovation have slowed. Removing that much money from the economy becomes a self-fulfilling prophecy. It also means that, if there is a reason to trust conventional investments, and a reason to expect more stability, large private cash infusions can be expected to occur that will accelerate the economy. Unfortunately, such cash infusions in an accelerated economy would also exacerbate wealth inequality.

(Click on the graph for the link.)

screenshot-2016-11-06-at-08-46-12

The $50 Trillion Conundrum” – Bloomberg

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One thought on “Stashed Cash

  1. Pingback: Data That Matters November 2016 | Pretending Not To Panic

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