Accumulating wealth in the hands of a few presents a significant challenge: What to do with the money?
Investing is very much a matter of confidence. What asset or financial instrument will generate the highest returns? It could be stocks. It could be real estate. It could be oil. But investors are like animal herds. If one asset shows promise, money quickly shifts in that direction. The result, of course, is a bubble, and that bubble inevitably bursts. The process repeats, creating booms and busts. Like sharks patrolling the seas for food, investors are constantly searching for the next bubble.
Paul Krugman suggests that the problem affecting the world’s economies is a glut of investment and too little consumer spending.
…what we’re seeing is what happens when too much money is chasing too few investment opportunities.
Meanwhile, the Rest of Us struggle. The solution would seem to be too obvious to mention, and it has nothing to do with making the rich richer.