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“Why Isn’t This Liquidity Being Utilized to Hire New Workers and Reduce Unemployment?”

Posted by Larry Doyle on October 19, 2010 2:37 PM |

Sense on cents implies that capital and liquidity will flow to areas in which it is protected and can generate a reasonable rate of return.

Thus, the question facing our nation is why all the liquidity injected into our system has not gained traction and promoted job growth and increased economic activity. Although I have written voluminously on this issue over the last two years, let’s allow Richard Fisher, the head of the Dallas Federal Reserve, to weigh in with his version of sense on cents.

Bloomberg highlights Fisher’s forthright and honest analysis in writing, Fed’s Fisher Sees U.S. Economy Expanding Near ‘Stall Speed‘:

Many of the corporations he surveys “report that the most effective way to deploy cheap money raised in the current bond markets or in the form of loans from banks, beyond buying in stock or expanding dividends, is to invest it abroad where taxes are lower and governments are more eager to please.”

Interesting. Lower taxes and government that appreciates capital formation and utilization. Fairly simple, no? Basic business, or I should say ‘sense on cents.’

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Lou

    What if Bernanke is wrong and his plans do not work? Then what?

  • fred

    Investment abroad is one thing, avoiding tax on overseas money market accounts is something else.

    “Capital moves to where it is treated best just as water flows to low ground”.

    But, cash on the books is cash on the books, if it’s taxed in U.S. accounts, (U.S. multinational co), it should be taxed in foreign accounts.

    I do favor a sales tax/value added and progressive inheritance tax over an income tax, we should be taxing consumption not investment, and a progressive inheritance tax promotes both American idealism and a strong middle class.

  • Lack of demand and a massive erosion in the faith of the system. We’re just getting started






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