All Commentary
Monday, October 4, 2010

Firms Borrow But Hold on to the Money

“Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves. The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.” (New York Times)

It’s what Robert Higgs calls “regime uncertainty.”

FEE Timely Classic
“The Great Depression and World War II” by Art Carden