Re:Index Investing Makes Markets and Economies More Efficien...
by bronz on Tuesday September 19, 2017 @12:32PM
(#15286125)
actually the stock market and other investment markets (and credit markets) serve to offset the effect of money-saving on the cyclical flow of money through the economy. if people saved a lot of money and saved it all in cash, there would be less money available in the product market and would result in a downward spiral of high prices and low employment. the stock market solves this problem by re-injecting saved money as investment into the pockets of companies. please be aware that i am new to economics so i may be mistaken.
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Re:Index Investing Makes Markets and Economies More Efficien...
by fsargent on Tuesday September 19, 2017 @05:33PM
(#15289021)
It depends on how they saved it. If people put it under their mattress it would be a problem. If they keep it in a bank (which offers an interest rate) the bank can loan that money out again, which massively increases the money supply. The stock market is a far smaller market compared to credit and loan markets.