Bryan Caplan reminds us of something worth keeping in mind:
Suppose you see an individual, a bank, or a corporation sitting on a big pile of money. What should you conclude?
Theory #1: The actor has nothing good to spend it on. ...
Theory #2: The actor wants a buffer. ...
Theory #1 is often popular, but all the evidence I've heard of supports Theory #2.
His point is that if people have cash because they have nothing to spend it on, giving them more money or taking it from them doesn't change things. However, if they have cash as a buffer, then giving them money will cause them to spend and taking it from them will cause them to save more.
It's important to understand what situation we're in (and it's likely different for different people/groups/companies, etc.) because what you're trying to do could backfire if you don't.
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