Unfortunately we've built an economy which requires progressively lower interest rates to sustain. Rebalancing will be expensive ( see the interest rate increase in the run-up to '08 )

    the only market mechanism to force money back into the rest of the system is for interest rates to rise

EDIT: (so things naturally trend toward the overlevered state and a crunch)

I'd say many of them are literally hoarding it.

This presupposes banks actually loan it out — which doesn't always happen, for example if lending officers are gun-shy or underwriting policies get too tight because senior management is gun-shy.

I think it's highly unlikely that these overseas banks that the rich use are doing nothing but sitting on their money and this practice accounts for all the purported "hoarding".

https://research.stlouisfed.org/publications/economic-synops...

That's not my point.

My point is that loan growth slowing is not the rich hoarding all the money. They don't hoard. Hoarding is not only unprofitable, it costs money.

https://advisor.morganstanley.com/liberty-group/articles/ins...

You get money as compensation for goods or services you provide to other people. The money is a sort of "IOU note" from the rest of society.

If you never spend the money, you've chosen to never cash in the debt. You're essentially gifting that money to the world.

There are a lot of complex and dynamic systems at work in the economy, and it's easy to make good sounding arguments for and against anything. I find it helpful to think of the fundamentals.

Further, lower-income people often have debts, which is reduced (relatively) by inflation.

Ideally money wouldn't be just sitting around, and if proverbial piles of it are, perhaps we need to redistribute it more so that it's used more productively. This is why wealth (and not just income) taxes are being talked about more nowadays.

The people you're disagreeing with consider buying up real-estate and company stock to be "hoarding" wealth because those assets could otherwise be put to productive use by someone else. People could otherwise live in those houses and become home-owners. Or the companies in question could get re-structured into smaller more efficient organizations during bankruptcy. It's hard for me to see the value of a real-estate investor buying his millionth acre of land when in earlier times multiple families could live on that land and call it home.

In contrast, you're assuming that any money being loaned to anyone is put to "productive use." And the flip-side of that is that the loan will come due some day. So accumulated wealth is used to accumulate more wealth from people who don't have any to begin with. In other words, the hoard of money is being used to extract rent and to hoard even more money. It's hard for me to see the value of that kind of system. It seems to lead to a continual serfdom as most people become renters of everything in their life.

It is, indeed, true that inflation can "melt away" existing debts by devaluing both the principal and the interest payments. There is historical precedent of large, debt fueled investments being inflated away:

"Anyone with debt benefitted as debts were inflated away to nothing under hyperinflation. For example a Pomeranian landowner took out a loan to purchase a property in February 1922 and repaid it in the autumn from the sale of less than half the crop of a potato field."[1]

However, this only occurs with fixed rate loans. Lower income people (US mortgage debt notwithstanding) do not have the opportunity to borrow at fixed terms and it would be very difficult and expensive to incur large debts, for any purpose, at fixed rates.

The floating rates that lower income people would, undoubtedly, borrow at would not protect them from inflation.

[1] https://www.stewartinvestors.com/all/insights/stap/hyperinfl...

However, any kind of unsecured loan will have a floating rate. Certainly that includes all credit card debt and any kind of short term business financing like paypal offers.

Further, if you have a poor credit score it is likely that your car loan(s) will have a floating rate and that you will be aggressively steered into a floating rate mortgage (an "ARM"). This will be presented to you as a benefit in the form of lower monthly payments (for now).

The wealthy are systematically benefitting from low-interest loans being reduced in value by inflation -- in the form of corporate bonds and leveraged trading (shorts, forex, margin accounts).

Inflation is good for you!

Those things are systemic issues related to other aspects of the machinery, particularly the incentives or mechanism of wealth distribution outside of money markets.

What I think we need to be considering is the highly concentrated nature of monolithic corporate capital and power. Like, for example, Amazon. The immeasurable value of the exchanges that took place globally for goods through Amazon. And Amazon tends to invest that wealth, which would be a net decrease in "capital entropy", while Amazon nets increased value despite the fact that they don't hold the capital. They do briefly inject a small sum of capital over a wide range of industries, though, like building materials, construction labor, engineering, and etc... But ultimately that money loses velocity, it doesn't have the momentum it needs because everything is so expensive now, and as a product most people opt to leverage.

On that latter part, as a miser of sorts, it's actually far more effective, even in the case of depreciating assets, to leverage. I could've been "educated" by now if I wasn't exceedingly scrupulous in avoiding usury. I spent many years of my life accumulating the relatively meager wealth I did collect and it's only put me at a disadvantage due to the nature of federal grants weighing personal holdings, from which I'm only able to draw in tax refunds, and only a fraction of what the ultimate costs will be it also puts me in a morally precarious position as far as other modes of welfare. That is to say you're dually (and quite possibly triply, with inflation) punished for choosing the "responsible" path of self-funding. To ossify that point, 0% interest increased sticker prices, so now buying big ticket goods comes with interest embedded.