Fun Number; Apple Has Twice As Much Cash As The US Government

"If you've got one single dollar bill and no debts then you've got more money than the Feds. Which is a very strange way of looking at it but still, from a certain angle, a true one." 
The emperor is being undressed in the light of day.

When the largest, most rapacious, Rip Off system on the planet is broke, it's INCOMPETENCE! So why are they not fired?

By Tim Worstall
13 April 2014

And, for good measure, Microsoft has more cash at hand that Uncle Sam does. That’s the finding from US Trust at least, that the two companies, along with several others, have more real moolah available to them than the government itself does. It’s a very fun number, to be sure, but it’s not quite right for a number of economic reasons. It’s true that when you look at the balance sheets then Apple, say, has $160 billion in cash available, that Microsoft MSFT -0.28% has a little under $85 billion and the Treasury only has $49 billion to hand to keep the government working. But it’s not really true for a couple of reasons that we’ll get to. Here’s one report on it:

Apple AAPL -0.21% has three times as much cash on hand as does the US government, and over twice as much as does the UK.

These figures come to us from the Bank of America's BAC +1.2% wealth-management arm, US Trust, as reported by London’s the Telegraph.

In its most recent quarterly SEC filing, Apple reported that it had $158.8bn (£94.9bn) in cash and cash equivalents plus short- and long-term securities. US Trust reports that the cash-strapped American government has reserves of just $48.5bn (£29bn).

So we could say that the companies have more cash than the government, true. But now for the two reasons why they don’t really.

The first and most obvious being that the government has entirely unlimited amounts of cash. Because they’re the people that create it. So, if they need more they can just go make some more. Yes, obviously they can just print more dollar bills but they’ve another way which is the simple creation of new electronic money. The Fed just says, hey, look, we’ve changed our minds about how much cash we’ve got and there’s another $100 billion in the drawer. This is, at heart, what quantitative easing is. Said Fed just invents some more money and goes out and buys bonds with it. This raises the price of/lowers the yield on those bonds and thus lowers long term interest rates which is the point of the exercise. So it’s difficult to state, with any real meaning, that the government has any shortage of cash, or even any known and limited amount, given that they can and do create as much as they wish whenever.

read more

No comments:

Post a Comment