8 hours ago, Maddus Mattus wrote
$200 billion in cash?
I don't believe that for one bit!
Where do they store it? Fort Knox? In gold?
They have the option to withdraw $200 billion from their banks. But they can't withdraw that kind of money, because the banks don't have that kind of cash.
It's the same with all of us. We have trillions of credit, but if we go and get the actual money, the bank will go bust.
It's all tied up in investments and other products, so to say that you want to give $200 billion to the poor, you first have to take the $200 billion out of the economy.
And by the way, that $200 billion is creating jobs for everybody,.
OMG. You really I thought I meant literal cash like in paper currency? LOL
Seriously, learn something about business before you talk about business.
When companies list "cash" on the balance sheet, it can't be in any kind of securities. It has to be in cash or "cash equivalents" like bank account balance, CDs, and savings bonds. It IS NOT being invested by the company AT ALL.
The banks themselves can invest some of that money for their own benefit. They are required by law to keep a portion of bank balances in cash. They can keep the cash themselves or send it to the Federal Reserve.
Another portion of the cash can be put into very liquid (and therefore low-risk) securities like T-bills. These are very short-term investments and are essentially as liquid as real cash. This amount doesn't even show up as separate balance sheet item in the bank's books. It's essentially treated as "cash" as well. A portion of the yield from these secondary reserves as well as the interest from the primary reserves paid by the Fed can be paid back to the company in the form of interest.
The rest can be used for loans, but we all know that banks are lending hardly anything these days.
So yes, these 3 companies have stockpiled $200 billion in cash. This is not phony money like market capital. It's cold hard cash that their customers have paid them and the companies are essentially sitting on that money collecting interest.
And that interest is pretty much coming straight from the government from the yield on T-Bills and government-issued bonds that the banks purchase from the secondary reserves. Corporations do everything they can to fleece the government by hiding away money in offshore accounts, and the money that they do report earns interest from the government. Talk about double dipping.