> I've heard this sentiment many times but I've wondered if there's an economic fallacy there.
There is, it's a confusion between money and capacity. That money is an option, the possibility of getting people to do things for you. Unused money is paper.
> Would the economy be better off if lots of companies stopped hoarding cash and hired lots of new employees?
The economy is an abstraction. It can't be better off. But if the companies that have the money had productive ways to spend it they would be doing so. The fact that there aren't that many productive ways to use the money is why the interest rate is so low. The interest rate is the cost of renting money.
If your future economic prospects require ever increasing consumption then surely there's a problem; resources are finite.
If we need more people consuming more and more stuff (that mostly gets put in landfill within a couple of years) then we're completely screwed. We need to start restructuring our way of life to accommodate the need to conserve resources, for one, and the need to support a basic standard of living for all people (across the world) for another.
Instead of encouraging increased consumption we need to be levying massive taxes against disposable items, requiring all goods to be largely recyclable, requiring the ability to repair before production can be licensed.
> If your future economic prospects require ever increasing consumption then surely there's a problem; resources are finite.
Yeah, that's the inherent contradiction of capitalism. But unless someone comes along with a different system we're probably stuck with that for a while.
Depends on what that 'consumption' consists of. We could have an economy of eternal growth in art, scholarship, mathematics, music, and software. The main input there is human thought.
>an economy of eternal growth in art, scholarship, mathematics, music, and software //
They're all production with minimal consumption agree; they hardly summarise current human activity though. They don't require [many] raw materials beyond energy and humans but nevertheless they do tend to still use some non-renewable resources.
This is also wrong. You just have to switch what to produce and to whom. There are many starving people in the world, and quite a lot new medicals to invent and so on.
There is, it's a confusion between money and capacity. That money is an option, the possibility of getting people to do things for you. Unused money is paper.
> Would the economy be better off if lots of companies stopped hoarding cash and hired lots of new employees?
The economy is an abstraction. It can't be better off. But if the companies that have the money had productive ways to spend it they would be doing so. The fact that there aren't that many productive ways to use the money is why the interest rate is so low. The interest rate is the cost of renting money.