Almost all investors agree that corporations hold too much cash.

Some observers criticize this practice. Last week, Alan Reynolds of the Cato Institute defended it, in a widely-read op-ed in the Wall Street Journal.

We respond to that defense, in part:

...(Reynolds) suggests that criticism of the almost $2 trillion in corporate cash balances "reveals appalling ignorance of elementary accounting." 

While he purports to understand accounting, he betrays his own appalling ignorance of elementary corporate finance, and what investors really think about those corporate cash holdings.

We provide a full response in this current blog post.