I almost agree with this. Of course it's a very small percentage of US wealth that's literally sitting locked up doing nothing. Money in a bank is doing something, being lent out or invested somewhere.

There's some wealth that's genuinely locked up, sitting in items that provide no utility for example. Say fine art locked in someone's vault or basement. But it's not all that much as a percentage.

Where the bigger problem in recent years has been is all the wealth tied up in what is essentially sophisticated gambling mechanisms in the financial markets. Money tied up in ways that aren't providing any true value to the economy (mumbo jumbo justifications aside). I'd be all for rules that stopped that sort of thing with funds subject to public bailouts. Your own money, your own risk, fine go ahead. Your money but risk assumed by the government? No. No thanks.

> If the money is in bank accounts, then it is contributing to the economy.

It is, but only in the most limited fashion. Money sitting in bank accounts is doing very little to improve unemployment. Buying physical goods would be much better for that.

> One of the worst economic problems of recent years has actually been the lack of money just sitting in reserve to give the banks stability.

In a way, that's true although I wouldn't frame it that way. The banks could make loans and then sell those loans as investments -- they didn't need any money on hand for that. Increasing deposits, for example, wouldn't change anything.

So arguably investment activity can merrily continue with low capital ratios at the banks (assuming they can effectively manage the securitisation of loans and/or the market stays hungry for them), but what happens when you reach an economic crisis? Such as in Greece right now where there are runs on banks. That's where having more deposits helps and where the potential downside is catastrophic rather than merely non-optimal.