This graph shows why our economy is not growing. It shows business investment during the good old days when business could see opportunities as in the 1990s.
But since 2012 capital investments have not been growing. Business is confused. They do not understand the purpose of all these ZIRPs, NIRPs, and QEs. They do not understand them because they fueled a huge equity bull market with no improvement in profits.
Business recognizes that the price mechanism has been severely distorted and the markets are not giving the right feedback because pricing channels have been neutered by the central banks. Why then should they invest in the future? The correct strategy is to wait and see for the fog to clear.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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