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Missing: $496.5 Billion in Corporate Cash

You may have missed this fascinating Real Time Economics article (Corporations Not Hoarding Cash) buried at 5am Saturday morning in the WSJ, but here it is:

In the Federal Reserve quarterly “Z1 flow of funds” report released late this past week, there was a slight discrepancy in the amount of corporate cash in Q1.

It was “up to” $1.74 trillion dollars.

And by up to, I mean down from $2.23 trillion dollars.

Did this money actually go missing? From the Fed report, its not clear whether or not this based on a significant accounting revision from recent quarters — meaning it never was really there in the first place. Alternatively, the money actually was pent, and corporate America added an additional half a trillion dollars in economic activity.

I suspect its the former . . .

Whoops! Where did I put that half trillion dollars?

Chart courtesy of WSJ

Source:
Number of the Week: Corporations Not Hoarding Cash
Ben Casselman
Real Time Economics, June 9, 2012

http://blogs.wsj.com/economics/2012/06/09/number-of-the-week-corporations-not-hoarding-cash/

This post originally appeared at The Big Picture and is posted with permission.

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Thomas Grennes is a professor of economics at the North Carolina State University and a former visiting faculty member at the Stockholm School of Economics in Riga. His research has dealt with various aspects of international economics, including open economy macroeconomics, international finance, and international trade in agricultural products. Recent research topics have included macroeconomic aspects of the Great Moderation, offshore outsourcing, sovereign wealth funds, and the relationship between government debt and economic growth. Earlier work dealt with emerging market issues in the Baltic countries and Russia and trade and macro policies in Sub-Saharan Africa. Economic history topics include the Columbian Exchange of plants and animals, the effects on food markets of introducing mechanical refrigeration, and the integration of Tsarist Russia into the world grain market. When he is not involved in economics, he enjoys mountain hiking.

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