Who's not investing?
A number of tech companies have significant cash reserves compared to their yearly costs and revenue. Microsoft, Apple, and Google all fall into this category with billions of dollars sitting in money markets or other liquid assets^. These highly profitable businesses are building huge stockpiles of cash instead of reinvesting it in their own business, purchasing other companies (M&A), or distributing it to shareholders through dividends. Let's look at the motivations behind high profit companies sitting on mountains of cash.
There's nothing good to buy
The most worrisome rationale for businesses hoarding cash is that there aren't any good strategic purchases or internal investments. Instead of distributing the cash to shareholders these companies use large cash reserves as a form of risk management. In highly unpredictable markets, like today's, when a company can't make a decision for how to utilize capital, it defers to cash banking.
The cash theory is implemented by voting shareholders* to retain optimal future purchasing flexibility. This is done to snatch any rapid growth companies that could be potential market disruptors, competitors, or that compliment current product features fluidly. Because the company's future is highly unpredictable, the corporation leverages cash as a way to hedge their bets.
Why stalled investment decisions hurt the economy
Consider a hypothetical example of a small village living in an arid region with only a handful of water wells.
The wells have all been privately discovered and the owners charge a tax on everyone who uses the water. The well owners become quite profitable because everyone needs water, and the owners fully optimize the distribution of water with brilliant aquifers maximizing their profit. The well owners have all grown wealthy and run out of investments for better water distribution leading to ever-growing reserves of gold and gems.
Word comes to town of mysterious shamans, who dance and foretell the coming of great rains. After one rain maker visits the village, a series of storms comes close enough to be seen. A heavy smell of rain is in the air, but none falls in the village. The wealthy well owners all grow deeply concerned because with rains comes an immediate drop in water prices, and an end to their businesses.
The well owners fiercely compete over hiring any rain makers they can find not to dance near their well. Some rain makers are good, but most have terrible track records. A little rain does fall, dropping water prices temporarily. The price of rain makers rises greatly and many come to the village promising not to dance for money and once paid, quickly depart.
Then more interesting news comes to the village. A neighboring town has developed a massive dam in a far off river to irrigate all their crops. The well owners realize that connecting these towns and having access to a river would destroy the water market. They quite rationally invest heavily in constructing a great wall between their village and the one with irrigation protecting the price of water.
You've got some 'splaining to do Lucy
The well owners represent current high profit corporations with massive cash reserves. They do their best to maintain the value of their business, in the face of changing times. The rain makers are merely charlatans, who pretend to provide market value in hopes of getting purchased by paranoid and enormously wealthy corporations. The neighboring village has dam builders which symbolize startups which are actively developing new markets.
It's not hard to see why the village's local economy was broken. The most wealthy businesses were capable of sustaining themselves much longer than they should have. Long term optimization of a single form of business can seriously harm a local economy. Even worse, when resources are extracted from an economy and then sit idle, to wither under inflationary forces.
I'm not saying businesses or individuals can't save mountains of cash. I'm saying we should look really hard at why they're choosing to do so, and fix it.
Notes:
^= I would have added Intel but they purchased Mcafee for 7 billion dollars.
*= common stock shareholders voting rights are largely marginalized in modern corporate structures