Sens. Chuck Schumer, D-N.Y., and Bernie Sanders, I-Vt., have a bright idea — no, not their idea about stopping companies doing stock buybacks, that’s drivel. They’ve forgotten that people don’t invest in something in order to grow the economy and make America a better place, but to get back more than they put in.
They’ve also forgotten, if they ever knew, the most basic points about money, economies, and investing. Imagine that we luck out and invest in something that booms. For example, Nick Hanauer being allowed to put cash in Amazon sort of lucking out. OK, great. Amazon buys back stock as a result of the vast profits now being made. We get money back — what do we do with it then? The Schumer, Sanders, etc. contention is that we then burn it or stick it under a pillow. While there might be the odd Scrooge McDuck out there, this isn’t what happens in general — we either invest that money again or we spend it. Either option grows the economy, adding to either demand or investment in it.
