To spell this out: high corporate profits and low levels of job growth are two sides of the same coin. If things were working properly right now, companies would take their excess revenues and use them to hire more people. Instead, they’re basically just letting those excess revenues sit on their balance sheets as cash because they’re scared to invest in themselves. It’s frankly pathetic.
The solution to this problem is nothing complex — the arbitrage is sitting there in the first chart, plain for all to see. The government can borrow at 1.45%: it should do so, in vast quantities, and invest that money back into the economy itself. Take a few hundred billion dollars and use it to fix our broken infrastructure, to re-hire all those laid-off teachers and firefighters, to provide some kind of safety net for the millions of Americans who have been out of work for more than a year. Even if the real long-term return on any stimulus package was zero, the nominal long-term return would be well over 1.45%, making the investment worthwhile.
So many issues with the last sentence. Do you know how large the opportunity for corruption is with that kind of borrowing program? You do; you see it whenever DOD happens to lose a few billion in Iraq or “accidentally” leave a bunch of rockets in Libya. If you trust the Federal Government to spend that kind of scratch wisely, you’re a fool. There is no reason to believe that you’ll break even at any yield in the current political environment - too much cash can easily be expropriated into the hands of residents of Northern Virginia by DHS or DOD.
I mean, you can boost the shit out of Tyson’s Corner retail, but otherwise? Forget it. All a massive borrowing program would do is put more drones in the skies over random towns across the country. At best you’ll be scanned, genitals to brain waves, as you take a bullet train to nowhere.
Consider this: neither corporations nor the Federal Government has any vested interest in you as an American, anymore. The wealthy in this country know that a high school graduate in China is functionally equivalent to an American without all of our “middle class” expectations. Developing nations will provide major corporations with effectively infinite labor, forever, without pause. And even consumers have been browbeaten into a state of tacit acceptance, understanding that the hidden cost of “low prices” is the death of the middle class.
Just give up. It’s better that a whole bunch of people wind up unemployed and hopeless, because then a blaze of cheap lives will kindle the kind of torch we’re going to need to see through this.
(Source: azspot)
