Useless Mountains of Cash

Why CEOs need to stop saving and start spending.

By Daniel Gross
Posted Tuesday, July 12, 2005, at 12:46 PM PT

The popular savings-glut meme holds that the global economic imbalances exist not because Americans (and their government) spend too much, but because the rest of the world—in particular people in Asia—spends too little and saves too much.

But maybe the real problem isn't the frugal Chinese. Maybe it's frugal CEOs. It now appears that there is another savings glut right here in the U.S.A. In the past several years, instead of spending cash on hiring, new machinery, R&D, or dividends, CEOs have just been sitting on it. Huge, useless mountains of dollars, yen, euros, and pounds sterling.