Econ 101

In economics 101 I learned that S=I. Savings equals Investment. What brought this to my mind was the recent news about the rich paying more in taxes. When a man has a lot of money there are two things he can do with it. First he can spend it and this of course is good for our consumer powered economy. The second is that he can save his money. It is from savings that banks accumulate the money that they lend. When a business wants to invest and expand they need money so they go to the banks for loans. If the banks have customers who have put money in savings then they have money to loan. The more money the banks have to loan the lower interest rate they can charge and the more incentive there is for business to expand. If you take money from a man who has a lot you are taking money right out of the economy and making it more difficult for business to operate. Now every day in the news a different expert comes out saying that businesses create jobs though expansion yet some of these same experts are suggesting that we raise taxes on the rich. Did they never learn about savings equals investments or did they just forget what they learned. Or maybe they just don’t know what they are talking about. I vote for the latter.