Productive investment opportunities

Dear Professor Wolff, I enjoyed your July monthly update's discussion of productive capital on strike in the U.S. You said that investors with low risk appetite are so desperate that they will accept negative interest rates to invest in the debt of countries like Germany. I've also seen in the natural gas industry investors "chasing yield" - overlooking some of the risks of investing in shale gas expansion out of desperation for relatively high-yield investment opportunities. Both points suggest a lack of productive investment opportunities in the U.S. I have two questions: (1) Why is more of that money not being invested into foreign corporations, e.g. in China, which appears to have come out of the recession faster than many other countries? Why do the banks seemingly prefer to hoard it?, and (2) If the financial sector would be doing better if there were more outlets for productive domestic investment, why is there not more support for Keynesian policies? Is it just ideology, or are there other reasons that finance is not pushing in this direction? Thanks!

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  • published this page in Ask Prof. Wolff 2016-07-22 21:47:24 -0400


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