Gyroscopic Investing

http://www.unz.com/mwhitney/looting-mad ... ack-binge/

Very interesting, though whether "the Fed" deserves to get all the blame is another debate topic .....

This explains why business investment (Capex) is at record lows. It’s because the bulk of earnings is being recycled into buybacks, over $2.3 trillion dollars since 2009 to be precise. And it’s all connected to the Fed’s zero rate policy. Zero rates have created an environment in which corporations no longer look for ways to grow their businesses, expand operations, hire more employees or improve productivity. Instead, they look for the quick fix, that is, load up on debt, buy more shares, goose the stock price, and walk away with a bundle.

Fred wrote: http://www.unz.com/mwhitney/looting-mad ... ack-binge/

Very interesting, though whether "the Fed" deserves to get all the blame is another debate topic .....

This explains why business investment (Capex) is at record lows. It’s because the bulk of earnings is being recycled into buybacks, over $2.3 trillion dollars since 2009 to be precise. And it’s all connected to the Fed’s zero rate policy. Zero rates have created an environment in which corporations no longer look for ways to grow their businesses, expand operations, hire more employees or improve productivity. Instead, they look for the quick fix, that is, load up on debt, buy more shares, goose the stock price, and walk away with a bundle.

The answer to that question is "yes".

Libertarian666 wrote:

Fred wrote: http://www.unz.com/mwhitney/looting-mad ... ack-binge/

Very interesting, though whether "the Fed" deserves to get all the blame is another debate topic .....

This explains why business investment (Capex) is at record lows. It’s because the bulk of earnings is being recycled into buybacks, over $2.3 trillion dollars since 2009 to be precise. And it’s all connected to the Fed’s zero rate policy. Zero rates have created an environment in which corporations no longer look for ways to grow their businesses, expand operations, hire more employees or improve productivity. Instead, they look for the quick fix, that is, load up on debt, buy more shares, goose the stock price, and walk away with a bundle.

The answer to that question is "yes".

I'm going to disagree on the principle that you can lead a horse to water but you can't make him drink. Assuming that interest rates are solely in the hands of the Fed, which I'm not so sure is true, I don't know if it was the intent of the Fed for companies to do what they have been doing as a result of low interest rates. I tend to doubt it.