An interesting post at the Marginal Revolution about corporations saving too much money and investing in vehicles such as t-bills. I think it's more of a problem than Mr. Cowen.

There are two sections I'd like to highlight.

"I ran a surplus this last year and paid off some of my mortgage; does anyone think I destroyed net real resource investment? (In fact I redistributed profits away from the financial sector, I suspect, which is good for the real economy at this point.)"

Isn't that the real problem here. There buissness are making financial investments instead of products. I'm far from a doom sayer, but you can't have it both ways. Is a dollar of dollar of a financial product like t-bills, stocks, derivatives always equal to a dollar of good or service?

"You might make an external cost argument. Perhaps each corporation does well by holding T-Bills, but the system as a whole suffers under the encroachment of state power and public sector expansion. That's not an argument which many proponents..."

I do think we have a prisoner's dilemma, but not because of an encroachment of state power. Each firm makes the individually reasonable choice of not taking the risk of actually making products or offering services, but if everyone takes that reasonable choice we end up with an unreasonable outcome. Money is shuffled through a relatively small number of hands, and while this increase the velocity, I think velocity is missing something.

Here's where my lack of rigorous economics training hurts me. There might be a term for this so I'll just describe it. What is equally imporant to the velocity is the spread of money. If I were to trace a single dollar, what would the the probability distribution of where that dollar would end up in a day, a week, a year. If there is a negligible chance that that dollar could end up in the hands of someone who makes near the median income, then that dollar, whatever it's velocity, is meaningless to the global economy.