| > Recent trends in economics leads me to believe the accumulation of wealth and capital from gains in productivity and technology is amassing into huge piles of cash that want Yes. > & need No. > to invest in something, so now the question is what? How about nothing? Yes, there is a lot of capital out there which wants to be invested in something profitable. I don't see where the need for investment is. If someone has $10 billion, and has $8 billion invested, and has $2 billion left over but sees no good investments, why do they need to invest that extra $2 billion? They don't need to invest it, so they don't invest it. What has the capacity utilization rate of total industry in the US been? A postscript at the end of this post tells you how to see for yourself on government websites. From 1967-1969 the rate was over 87% every year. From 2001-2007 it never exceeded 80.4%. And from 2008 to 2012 it never broke into the 80's, even hitting 68.6% in 2009. I can't find data past 2012. That's just one trend, but if existing capital was being used at an 87% rate at the end of the 1960's, whereas in past few years it has been used at a 68.6%-79.2% utilization rate, why invest in a new capital plant? Companies aren't even using their old capital plant. The statistics say there's overcapacity. Over the past decade, invested capital has been sitting idle 20%-30% of the time where it could be in use (invested capital, meaning money invested in the stock market, VC firms etc., not money that those with a lot of money are keeping on the sidelines - counting that, the amount would be even higher). In 2009, even more than 30% of industrial capacity was unused - for the whole year. From the standpoint of profitability, capital is overfunded already. Which means there is a small amount of overproduction - even with 20-30% capital plant non-utilization, sometimes a tiny bit more more commodities are put out then needed (or a lot more in the case of homes paid for by subprime mortgages). If capital plant production went down to 15% underutilization, that would be massive overproduction of commodities - and would still mean 15% underutilization. People can't afford to buy what is being built with companies running at 70-80% of capacity. So why invest more in companies? People aren't buying what the existing capital plants are capable of putting out. P.S. Go to https://www.whitehouse.gov/administration/eop/cea/economic-r... which is the 2013 Economic Report of the President . Go to "Appendix B: Statistical Tables Relating to Income, Employment and Production". Look at "Table B–54. Capacity utilization rates, 1965–2012" which is page 75 of the PDF and page 387 of the overall report. |