Seems very naive - what would doing a lot with it even mean? It's definitely not under their mattress and even if it's sitting in a bank at 0.1% it's being invested by the bank. Otherwise it's going to be in some mix of stock, bonds, and private investments. Don't see how that's much different than the entrepreneur who sold their company for $X,000,000 and doesn't reinvest all of it into their next company
Doing whatever the person saying that phrase wants, which clearly takes precedence over the goals of the person who actually made the money.
Money invested in AAPL/AMZN/FB is no more or less passive and no more or less "dumb" than money invested in VTSAX, IMO.
In other words, I can "hire" the active managers of those companies on my behalf as an investor.
Dumb money is money from people who actively invest it dumbly. For example, buying into pets.com because the internet seems cool.
Might be different now.
This way, the entrepreneur has incentive to spend it or do more investments instead of keeping it in the bank where it would be taxed.
This incentive leads to inequality decreasing by the economy being more active.
Going a step up, over a reasonable short term, true blue chip stocks are almost gold in terms of stability. Tax them or not?
Money is always invested, even if you have it invested in the generic dollar instead of some other product. While it is common to think of the dollar as not being an investment, I find considering it an investment that is constantly losing value due to inflation to work better in my mental model.
This is more likely to kill jobs and prosperity than it is to produce them. It's also one of the prime causes of market bubbles.
If it's being actively invested, the investor has the opportunity to build new companies.
If it's redistributed by the government, the government can spend it on improving critical infrastructure, which is an easy way to create jobs and improve economic activity of all kinds. It can also invest it in new tech and R&D, which eventually trickles down to new opportunities for innovation.
trickles down
Trickle-down economics works for government spending, eh?
What do you mean by that? Existing companies raise capital to fund things like R&D, Capex, and entrances into new markets. All of these promote economic and technological growth and generally result in the creation of jobs.
> This is more likely to kill jobs and prosperity than it is to produce them. It's also one of the prime causes of market bubbles.
I'm not sure why you think investment causes job destruction. It's quite likely that there is less capital (for production) currently than would exist at the so called "golden level of capital". Increased investment would actually help rectify this (at the cost of current consumption). See a model like the Solow growth model for more information on this.
> If it's being actively invested, the investor has the opportunity to build new companies.
Unfortunately, many people have neither the desire nor the capability to successfully build companies and are able to enjoy returns on their money precisely because financial markets exist to invest in.
> If it's redistributed by the government, the government can spend it on improving critical infrastructure, which is an easy way to create jobs and improve economic activity of all kinds. It can also invest it in new tech and R&D, which eventually trickles down to new opportunities for innovation.
What makes the government better at job creation and R&D (with the exclusion of basic research) than the private sector? Greece has shown that governments can, in fact, allocate resources rather poorly [1].
[1] http://www.businessinsider.com/kyle-bass-chief-bank-economis...