Corporations sitting on cash need extra incentives

In an editorial posted in today’s The Washington Post, Fareed Zakaria makes strong points about methods to stimulate the economy. He points out that $1.8 trillion in cash held by a number of corporations can make a dent in the economy if incentives can be put in place to move that money off of the sidelines.

I think that two trillion dollars in cash will only come off the sidelines when these businesses holding the cash see opportunity for higher returns. Money moves to the area of highest returns.

Mr. Zakaria is correct to point out the concerns of businesses when it comes to regulatory threats. The uncertainty as to what business models are put into play are increased with every notice of rulemaking and proposed regulation. As the process of regulatory decision making is dragged out over months, it means that businesses lose out on revenue making opportunities. That is not good for the country.

Interest rates will have to increase in order to account for these risks. When this happens, we will start to see money move from business coffers into the stream of commerce.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
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