[andsoitis]

> One would indeed expect removing currency from the economy to be deflationary, but in GPs example

the issue is that the GP's premise ("When super-rich people receive money, it goes mostly to tax havens, removing it from circulation.") is invalid.

[Volundr]

The question I answered was:

> Doesn't the lack of liquidity in an economy cause deflationary behavior?

Which seems to accept the given premise.

But ok, let's look at yours:

> the issue is that the GP's premise ("When super-rich people receive money, it goes mostly to tax havens, removing it from circulation.") is invalid.

Is it? I thought it was well understood at this point that the best place to stimulate the economy was from the bottom, because every dollar put in goes directly back into circulation, creating demand, while the wealthy and middle class will save some portion of it. Certainly I don't think the money in my savings account is doing much to create the kind of demand that would stimulate job growth, and while one might argue that the stocks in my 401k are doing something the idea that it's driving more growth than buying a car is... Dubious.

But if you have data please share.

[andsoitis]

> > the issue is that the GP's premise ("When super-rich people receive money, it goes mostly to tax havens, removing it from circulation.") is invalid.

> Is it?

Yes, it is an inaccurate belief. The super-rich don't take most of the money (did the person mean money or did they mean wealth?) they receive, remove it from the economic system, and stash it unproductively in a tax haven.

[dannyobrien]

I mean, apart from the open question of whether the majority of money gets moved into tax havens, if the money is out of the economic system entirely, won't it just inflate away? I presume rich people want to put their money in instruments that return interest, which means that it has to be used /somehow/. I mean, potentially just speculative assets like gold or art, but those are high risk.

[andsoitis]

see my reply to sibling about where most of the wealth of the top 1% is applied (tl;dr productive assets or ownership)

[Volundr]

Ok, what do they do with it, and how does effect the economy compared to the way lower wealth people behave when they receive money?

FWIW I do agree that if we give Jeff Bezos or Elon Musk more money, it's not headed straight for an account in the Caymans, but I also don't think the exact destination of said money is core to the point.

[andsoitis]

> what do they do with it, and how does effect the economy compared to the way lower wealth people behave when they receive money?

Most of the wealth of the top 1% (to pick an arbitrary "small group of people") is not sitting as cash in the bank; it is concentrated in financial and business assets: equities & mutual funds, private businesses, real estate, bonds and other fixed-income investments, alternative assets.

In the US, over half of all publicly traded stocks and mutual fund shared are held by the top 1%, meaning their wealth is overwhelmingly tied to ownership of productive assets rather than wages or savings accounts (and is therefore illiquid).

[Volundr]

Great! So how does that compare in economic impact to spending it?

I can help with that: it doesn't. If I buy stock, it doesn't create demand for... Anything. Unless it was stock bought from the company itself it doesn't give the company any more funds to work with. It doesn't help the company produce more, nor does it create demand that would encourage them to do so.

[andsoitis]

> So how does that compare in economic impact to spending it? I can help with that: it doesn't. If I buy stock, it doesn't create demand for... Anything.

1) Many of the super wealthy have the shares because they created the company and get awarded stock each year as compensation. Of the 10 richest people on the planet (in order: Musk, Ellison, Zuckerberg, Bezos, Page, Huang, Brin, Balmer, Arnault & Family) 8 or 9 of them were the primary founder or co-founder.

2) Even if they didn't, then it is worth knowing that trading shares benefits the economy in several interconnected ways; some direct, some more subtle: Efficient Capital Allocation, Liquidity and Confidence, Price discovery, Risk transfer, Wealth effects, Global capital flow. Or in short: Trading shares doesn’t just “move money around” — it helps connect savers with businesses, keeps capital moving toward productive uses, and makes the whole investment process safer and more flexible.