Currently, corporations are sitting atop mountains of capital. An LA Times article recently reported that they are investing and spending it in countries where consumers have the cash to buy. By lowering interest rates US consumers are able to make the household purchases, buy homes etc. This is a point that Schiff doesn’t appear to take into account.
“By lowering interest rates US consumers are able to make the household purchases, buy homes etc.”
Not if they have a huge debt overhang and/or no job. We need tons of new investments here, right now, and we also need to ditch the additiction to consumption as a solution to all problems. That is what has gotten into this huge mess to were we cannot pay our bills.
Keynesian's don't get that. They can draw dividends and interest, or spend it on new plant. Obama doesn't want either one. He would rather hold it hostage with threats of taxation and regulation and brow beat them as non patriots because they don't want to fund another boondoggle shovel ready project.
If we feel we can make better returns by investing in new plant and employees, the money will flow out of accounts like honey. Otherwise we will make the prudent economic decision to remain miserly skinflints with our money in a mattress. Happy unemployment!
Keynesian = Epic Fail.
When the rates do go up, they will be left having made purchases they cannot afford.