The Thing That Used to Work Doesn’t Work Anymore
There are two points to increased central bank liquidity:
- Reduce the cost of capital so that marginal- or high-risk/reward investments go from thumbs down to thumbs up.
- Reduce consumer credit costs to stimulate consumption as well.
Notice, I didn’t mention making the stock market go up.
But that’s what’s happening. Outside of IP investment, fixed investment growth has been moderate at best. This chart is nominal fixed investment as a percentage of the M2, all the cash in checking, savings, and other short-timed deposits:
As you