Bill Gross: QE1-3 Added No Savings or Investment

♠ Posted by Emmanuel in , at 11/04/2012 11:47:00 AM
In case you missed it, bond investing legend Bill Gross has just provided the most damning evidence that various Fed easing efforts have been worse than useless. You'd think all of this helicopter dropping of cash would encourage more investment which in turn would generate more jobs, but capital expenditures Stateside are actually dropping like a rock even if real interest rates are well and truly negative:

It is of course expected that Americans just keep spending their brains out since they can't help it. But, to put money aside for productive expenditures? You must be joking. We're talking about modern America here, an instant gratification society that hasn't had much to be grateful for as of late. And, where there's no investment there's no savings. Much has been made of laughably puny increases in consumer savings since the events of 2007, but if you add together government, business and consumer savings, the truth is that US net national savings are scraping all-time lows in negative territory where it's been the last three years:

I'd like to ask the Drezner wannabe USA#1 cheerleaders to explain these charts. Clearly, that has-been nation isn't investing in the future because...they simply have no savings left to invest. What a joke. Obama or Romney, their next leader will certainly reap the misery sowed by essentially non-existent investment. Given a non-existent future, it may be the "rational choice."

I'll leave Bill Gross to deliver the coup de grace:
All of the money being created and freed up is elevating asset prices, but those prices are not causing corporations to invest in future production. Admittedly, the chart shows this downward spiral has been underway for decades, but financial repression and quantitative easing were supposed to be the extraordinary monetary policies that kick-started the real economy in the other direction. They have not.
Is it any surprise that, for more sensible young Americans, the "American Dream" is to leave America? Take your money and go--everyone else already did.