Lo! Profit Rates are Falling
A bearish mood has washed over the investment world. Everyone knows that the developed economies are floundering in their pursuit of growth and that emerging economies are oppressed by low commodity prices. But, this itself doesn’t explain the level of bearishness we’re experiencing. You would expect that someone, somewhere has a sense of future profitability. The problem is that nobody has a clue how profits could possibly be made.
Everyone is fleeing to the safety of government bonds or cash, and governments are predominately using lowered interest rates to push them back into equity.
It’s important to note that this is not a misalignment between investment opportunities and the Capital to pursue them — investors are flush with cash. They are simply correct in their pessimism. If I can invest 1k USD today for 1k + 1 USD 10 years from now, what is the point? The rate of profit is falling, and the only reason no mainstream economists or analysts are saying it is because they haven’t read Marx.
