This is the Cato Daily Podcast for Monday, August 23rd, 2010. I'm Kayla Brown.

Businesses and families are building up cash reserves, self-insuring against these

uncertain times, but is the desire to hold cash excessive?

If it's the so-called paradox of thrift at work,

should the government tax cash holdings

to get businesses investing and people spending again.

Mark Calabria, Director of Financial Regulation Studies at the Cato Institute, comments.

A lot of people have been complaining about excessive money demand.

That is money that businesses are recouping from whatever job cuts and things like that to trying to get to a profitable position

that whatever profits that they're yielding aren't being sent out to the broader economy.

People are continuing to hold cash larger.

Yeah, stock-tiling.

Credit card debt is on its way down. some people have said well look if we want to get this

money back out there we need to change some tax rules that will

exactly get the money back out in the economy so that we do not suffer from this

paradox of thrift where everybody's holding cash rationally and collectively it's

an irrational action. I mean for instance one of the things that's been talked about is taxing corporations on

excess holdings of cash and one of the interesting facets of this

crisis, non-financial corporations came into this crisis

with record levels of cash.

So even before the banking sector contracted and credit contracted

companies had already stocked up on cash essentially.

...