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Investment Shouldn't Be a Four Letter Word


This morning, a guest on CNBC said investment by companies on plant, equipment, software, etc. was just around the corner. I've heard this for five years. But, as long as short-term stock prices drive executive pay, companies will prefer using cash to push up their stock price.

When business investment is not enough for everyone who wants a full-time job to have one, economist, John Maynard Keynes, urged governments to spend more. During the recession, the government boosted infrastructure spending but they didn't sustain it.

Without sustained investment, people who want full-time jobs won't find them and incomes don't rise. Without income growth, consumers can only increase spending if their houses or stocks go up, or they increase their debt.

Economic growth starved of investment but fueled by asset appreciation and debt is how we got into this mess.

Securities are offered through Cambridge Investment Research, Inc., a broker/dealer, member FINRA/SIPC. Investment advisory services are offered through Cambridge Investment Research Advisors, Inc., a federally registered investment advisor



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Comment   |  5 years ago from Boston, MA