> You may be right but what about his point that as long as treasuries are
> high yielding investors will shy away from other more risky investments
> that would actually increase production?
Untrue, for three reasons: (1) most real investment takes place via reinvested profits or bank lending, not stock options or bonds, which are speculative claims on future production. (2) Investors nowadays are mostly institutions - hedge funds, banks, chaebol, keiretsu, and governments (China, Russia). They want security and predictability, and T-bills (US Government bonds) are still a reasonably safe investment. (3) The fundamental problem with the US economy isn't lack of investment opportunities, but rather 35 years of market fundamentalism, which has enriched the few at the expense of everyone else. Result: US consumers went deep into debt on their mortgages, cars and credit cards to maintain their living standards. Now all those debt bubbles are unraveling all at once. To avoid catastrophe, we need major government spending to bolster consumption right now, and then redistribution from the rich to the rest of us, to bolster savings in the future.
-- DRR