19 Million Jobs For
Workers: The Impact Of Channeling $1.4 Trillion In Excess Liquid Asset Holdings Into Productive Investments U.S. 12/5/2011
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“There is no reason that the
needs to remain stuck in a long-term unemployment crisis.” Robert Pollin, lead author of the report and co-director of the Political Economy Research Institute. U.S.
S U M M A R Y O F S T U D Y
Amid the ongoing employment crisis in the
economy, U.S. commercial banks and large corporations are sitting on huge hoards of cash and other liquid assets. The banks are carrying $1.6 trillion in cash in their accounts at the Federal Reserve while the corporations are carrying about $2 trillion in liquid assets. In combination, these holdings amount to about 23 percent of U.S. GDP. [snip] U.S.
H I G H L I G H T S O F M A I N F I N D I N G S
Starting with the financial collapse and Great Recession of 2008-09, the
economy has been experiencing the most severe and protracted employment crisis since the 1930s Depression. As the employment crisis has proceeded, U.S. commercial banks and large nonfinancial corporations have been building up huge hoards of cash and other liquid assets. This study examines the impact on job creation of mobilizing these excess liquid assets into productive investments within the U.S. economy over the next three years. U.S.
1. $1.4 trillion in excess liquidity. Commercial banks are carrying a total of $1.6 trillion in cash reserves and the nonfinancial corporations are holding $2 trillion in liquid assets. After accounting for the safety needs of these businesses in a highly risky economic environment, we conclude that the banks are holding $1 trillion in excess cash and the corporations are carrying $400 billion in excessive liquid assets. This brings the total of excess cash held by the banks plus excess liquid assets held by the corporations to $1.4 trillion.
2. Credit market lockout for small businesses. As a corollary to the banks piling up cash reserves, smaller non-corporate businesses have experienced a massive contraction in the supply of credit available to them since the onset of the recession. Total net borrowing for these businesses has been in the negative since 2009.
3. Unemployment would fall below 5 percent by 2014. Approximately 19 million new jobs would be generated within the
economy over three years if the $1.4 trillion in excess liquid asset hoards were channeled into productive investments and job creation. This would push the unemployment rate below 5 percent by the end of 2014. We document how this would create new opportunities for workers at all credential levels within the U.S. economy. We also show the regional benefits for both the U.S. and Los Angeles metropolitan areas. [snip] Seattle
Dan Froomkin of Huffington Post reports:
's largest banks and non-financial companies would just loosen their death-grip on a chunk of the $3.6 trillion in cash they're hoarding and move it into productive investments instead, the report estimates that about 19 million jobs would be created in the next three years, lowering the unemployment rate to under 5 percent. America