He characterizes it as a cash "glut" but that implies, to me, that there is too much cash and not enough to spend it on. I would argue that, since the Great Recession, the US has suffered from...
He characterizes it as a cash "glut" but that implies, to me, that there is too much cash and not enough to spend it on. I would argue that, since the Great Recession, the US has suffered from being cash starved. For a long time we've been talking about a "savings glut," especially in Asia, where there was simply more money being saved than productive places to invest it. Instead it ends up going into high-end real estate and other, showy sectors like crypto because they can still get really high returns (for as long as the bubble goes).
Part of the reason there aren't as many productive investments is because we've made these unproductive investments so valuable (by not having enough housing in economically dynamic regions) but also because people just don't have the money to blow on discretionary spending. The high prices of housing, education, and healthcare combined with the large amounts of consumer debt should be interpreted as forces that leech cash out of the productive centers of the economy (the parts that produce goods and services) and siphon it into unproductive sectors (collecting rents for landowners, creditors, and university administrators.
Once people are flush with more cash, have protection from eviction and foreclosure, and suspension on student debt servicing then we're freeing the dynamic, productive sector of the economy to actually stoke demand rather than bid up the prices of fixed assets and lose their productive capital to student loan creditors.
I think it can both be true that excessive rent-seeking is hampering how efficient the economy is while the effects of a "cash-glut" work its way through a system that is otherwise "cash-starved"...
I think it can both be true that excessive rent-seeking is hampering how efficient the economy is while the effects of a "cash-glut" work its way through a system that is otherwise "cash-starved" but I largely agree with your point.
He characterizes it as a cash "glut" but that implies, to me, that there is too much cash and not enough to spend it on. I would argue that, since the Great Recession, the US has suffered from being cash starved. For a long time we've been talking about a "savings glut," especially in Asia, where there was simply more money being saved than productive places to invest it. Instead it ends up going into high-end real estate and other, showy sectors like crypto because they can still get really high returns (for as long as the bubble goes).
Part of the reason there aren't as many productive investments is because we've made these unproductive investments so valuable (by not having enough housing in economically dynamic regions) but also because people just don't have the money to blow on discretionary spending. The high prices of housing, education, and healthcare combined with the large amounts of consumer debt should be interpreted as forces that leech cash out of the productive centers of the economy (the parts that produce goods and services) and siphon it into unproductive sectors (collecting rents for landowners, creditors, and university administrators.
Once people are flush with more cash, have protection from eviction and foreclosure, and suspension on student debt servicing then we're freeing the dynamic, productive sector of the economy to actually stoke demand rather than bid up the prices of fixed assets and lose their productive capital to student loan creditors.
I think it can both be true that excessive rent-seeking is hampering how efficient the economy is while the effects of a "cash-glut" work its way through a system that is otherwise "cash-starved" but I largely agree with your point.