This is the Frank Capra, Ronald Reagan answer to the question, and the problem is, John and Jane Onepercentington aren't investing their money with George Bailey's Good Ol' Savings And Loan so he can loan it to a bright-eyed entrepreneur with an idea and a dream, not for decades now.
What they're actually doing is investing half of it with an offshore company who use a room full of computers to make thousands of transactions per second, arbitraging the Yuan against Bratislavan pork futures, and the other half with a hedge fund who return 7% per year buying out successful, American entrepreneurs and making them fractionally more profitable by outsourcing 90% of their workforce to a call centre in Ranjipur, while lobbying for massive tax breaks for the 10% of the jobs they didn't ship overseas.
> investing in the stock market, which means owning a piece of companies so that the companies have the capital to continue or expand their operations, which means hiring construction workers, purchasing equipment and thus keeping the equipment manufacturers employed, and hiring additional employees.
Everything after "so that" is wildly misleading. If a company is IPOing or raising a new round of capital, then yes, this will give the company more capital. But just buying stock means moving the stock from one (wealthy) person to another.
This is one of the reasons why stock markets, housing markets, etc overheat. If rich people double their money, they need places to put it. Housing and stocks are (arguably) good places, so housing and stock prices tend to increase when there's more money to park in it. Once the good times end, these valuations quickly deflate as everyone tries to take out their money at the same time (but no one is buying, because they were using these assets to park their wealth, and there's no one with new wealth who wants these assets).
The argument is not that the rich are 'hoarding' the money as if 'hoarding' in this sense is 'keeping it in a vault somewhere'. Of course the money is out there in the economy and getting used by banks and businesses. But the 'rich' still own this money and over the past 30 years own much more of it as a % of the total money pool compared to the 'non-rich'.
When one small % of society starts to concentrate the wealth, you have issues.