A set of very destructive policies all combining at the same time

Good point on commodities

The savings glut keeps the US afloat

It funds the Federal govt and funds the over consumption that shows up in trade deficit

If I might chime in here. Companies do not invest because the marginal rate of return on investment has been falling for many years. Demand, despite all that is said about robust the U.S. economy is, remains tepid. Growing at 2.5-3% a year does not put any pressure on productive capacity in the US. On the supply side, production can increase without more capital investment --still room to produce more. at zero marginal cost And, of course, Asia more modern and lower cost production facilities than US manufacturers.

Take #BillGross. In the past there have instances where Gross made very strong statements about the future of #bonds. For example, when the Fed decided to reduce its purchases of bonds, Gross called for the selling of bonds because in his words " who will buy bonds? " if the Fed is not there. He happen to short the bond market and this statement is consistent. As it turned out, he was wrong and had to cover his short position in a hurry. Soon after the Fed' s announcement of winding down QE, bond yields fell steadily.

An excellent argument on all points.

I find that Gross and Gundlach often make pronouncements based on their book-- what bets they have already placed.

Arthur

A good piece. It is so often forgotten that productivity and robots have taken US manufacturing jobs, not China.

Norm

The whole question of a slow down in growth is related to the supply side of the economy. Namely, the labour force is slowing, participation rates are very low, productivity growth is weak and capital formation is low. The last item should be higher given the cost of capital, but the additional supply from added capital stock is not needed. Again, it is a matter of excess supply of labour and capital. The Fed never acknowledged this because monetary policy does not work on the supply side.

I bet if Milton Friedman were here today, he would advocate a squad of helicopters fly over the world dropping money of every kind in every country. The issue is whether this would lead to greater spending or greater savings.?

A valid point. That said, what has changed is what is normal. The EU is doing well with negative rates, so that suggests that North America could fight the next recession with negative rates, abhorrent as that sounds.