Chasing Investment

Recent volatility in the Chinese stock market has had the effect of dragging down the DOW by about 600 points.  Some say it is a needed adjustment.  Paul Krugman makes an interesting point that it is emblematic of too much money chasing too few investment opportunities.  Now, the Chinese market has its own problems but the effect on other markets could be affected by this.

Fair Warning!!  I am not a financing or investment guru but if that is true then what can we make of it?  It seems that perhaps markets are saturated and, under present circumstances, there is no room for growth.  What would happen if that money that is not creating jobs or new opportunity were to be returned to the middle class?  Let's say, in the form of jobs created by government such as infrastructure improvement or clean energy investment.  Then the problem becomes simply one of how the money is transferred from private hands to public hands for purposes of these tasks.  The solution seems to be obvious.  The money was allowed to accumulate in the upper tier by way of tax breaks and low rates of taxation.  Either create ways to encourage that money to move or tax it back to government treasuries.  No doubt this will create a great hue and cry but what else will do the trick?