I understand the basic concept of investment leading to growth, but my question has more to do with investment dynamics in the real world.
When Republicans argue that tax cuts for 'job creators' will lead to growth and more jobs, I wonder if the money these tax cuts leave in the hands of the so-called 'job creators' actually goes into the kind of investments that produce anything of real value.
I can't help but thinking that most of this money goes into hedge funds and private equity schemes whose main purpose it to create profits out of thin air using the wide panolopy of financial products and every kind of strategy, scheme, or financial chicanery they can come up with.
How much of this invesment money goes into true capital expenditure or other productive investment? Anybody have any good explanations or facts and figures?
I am not stating a position here, I am trying to figure what really happens to this money.
I realize this question could go in the Election 2012 thread but it is also a general question and i hope it will generate some good answers.
Good question, I wonder the same myself. Even if you got an answer I think it would be pretty vague suggesting that regardless of money going into a hedge fund or even an hft that eventually it loops back into other investments and thus trickles down. The real question is whether that loop eventually invests domestically or in foreign companies and products. Either way, I think it would be very hard for anyone to get any true figures on the topic since most of these portfolios are private.