Is that really true? The rich mostly put their money in the growth instruments like debt and equities. Someone needs to invest in businesses. Diverting the money presently sitting in investments towards spending would break the current system.
The Federal Government can deficit spend to invest in any necessary infrastructure or supply chains (funded by central bank operations), if the wealthy fail to do so. There is too much capital chasing too few returns, which indicates capital has lost a lot of its value.
Are you suggesting that the federal government start a federal hedge fund, or are you suggesting that they directly operate industries? Neither one sounds very efficient, especially given the government we're talking about here. (How satisfied are you with the current administration? How much more power should they have?)
The Federal Government operates Fannie Mae and Freddie Mac, the largest mortgage GSEs. The Federal Government operates the largest military in the world. I am suggesting the Federal Government take whatever actions are necessary to ensure and protect a functioning economy, whether that's acting as a consumer or producer of last resort.
I am aware of the devil's arrangement this is with the current administration. This administration, like all administrations, is temporary.
Note how current "cost effective" supply chains have collapsed significantly [1]. Survival of certain supply chains, distribution networks, and institutions is preferable over a few percentages in cost savings.
https://en.wikipedia.org/wiki/National_security ("National security or national defence is the security and defence of a nation state, including its citizens, economy, and institutions, which is regarded as a duty of government.")
Emphasis mine. Conversely, "efficient" businesses like Hertz (who ran at max capital leverage) are realizing the cost of doing so (including Carl Icahn, who lost $1.6 billion in the process). I think it's a bit silly to assume all private businesses are more efficiently operated than government (and does a grave disservice to hard working civil servants), but I'm happy to reply with bankruptcy after bankruptcy to prove my point [2].
They're the mechanism by which it is ensured that only efficient organizations stick around. They're the economic equivalent of a civil servant getting pushed out of their position because an elected official is afraid of losing an election, except they are much more direct.
