In response to an FT article by Ed Luce on 26th July 2015, entitled 'Hillary's war on quarterly capitalism'
"The longer this cycle continues, the more puzzling the investment drought becomes. With healthy profits and a near zero cost of capital, now ought to be the time to lay down plans for the future"
This may be puzzling to people who gaze at equilibrium models and optimal control panels and believe that what they are looking at remotely describes the real economy. It may also be puzzling to people who look no deeper than headline government statistics, people who for example, get excited about 300k new part-time low wage jobs, whilst glossing over the loss of thousands of skilled full-time jobs, and the record numbers of people dropping out of the labour force.
It isn't remotely puzzling to anyone who understands the stifling effect that mountains of debt have on the 'confidence' of producers and consumers alike. This 'recovery' is an asset price inflated chimera based on QE and ZIRP. Wall Street may buy it, the academics in the Eccles Building may buy it, but as far as many businesses and people on 'Main Street' are concerned, it's a sick joke.
Producers are not investing, because deep down, in a place that is not swayed by academic nonsense, or Hillary Clinton's latest attempt to be relevant, they know that an economy that is still on ZIRP after 7 years, where there is a third more debt than there was in 2008, is not a safe environment to make long term capital investment.
As for consumers, it's even simpler - why are people are not rushing out to spend their 'gasoline' bonus as expected by the 'aggregate demand' gurus in the Eccles Building? Because people don't want to spend money they haven't got on stuff they don't need. In the real world, paying off your debt isn't 'savings' - it's paying off your debt - something that Hillary Clinton, and the other clowns running for office have absolutely no intention of doing - ever.
Faith in this Ponzi Scheme is running out.