Businesses Hoarding Cash is a Long-Term Trend


I’m now glad I was too slow on the draw to post much last week on the controversy over why corporate America is sitting on such large piles of cash. It turns out (via Ezra Klein and Tyler Cowen) that this is a longstanding trend. Barry Ritholz has copied charts and graphs from the FT that will finally make it clear:

FT-Corp-cash 1

As an economics question, this now becomes more interesting. But as an explanatory factor for today’s economic problems, it becomes a good deal less interesting.