Robert Higgs observes: "Gross private domestic investment peaked in 2006. Between the first quarter of that year and the second quarter of 2009, it fell precipitously, by nearly 34%.
During the second half of 2009, investment spending increased by only 10%, so that late last year it was still (when measured at an annual rate) running 29% below its early 2006 level.
This huge decline in investment spending portends an extended period of slow economic growth, lasting several years and perhaps longer. Worn-out equipment, obsolete software, ill-maintained structures and depleted inventories are not the stuff of which rapid, sustained economic growth is made...
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Comment: Subdued private investment, exorbitant fiscal deficits, and regime uncertainty represent a combination of factors that will reduce the the productive capacity of the economy while at the same time consumption demand and government demand holds up. Given that Obama may nominate Yellen as the next Fed's vice chairman and that thus Bernanke will get more support to his low interest rate policy, one can be as sure as one can be sure regarding economic matters that the US is running at full speed into hyperinflation.
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