April 25, 2015

IF IT IS A PROBLEM THE ANSWER IS OBVIOUS:

Glut of Capital and Labor Challenge Policy Makers (JOSH ZUMBRUN and  CAROLYN CUI, April 24, 2015, WSJ)

The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor--a glut that presents several challenges as policy makers struggle to stoke demand.

"What we're looking at is a low-growth, low-inflation, low-rate environment," said Megan Greene, chief economist of John Hancock Asset Management, who added that the global economy could spend the next decade "working this off."

The current state of plenty is confounding on many fronts. The surfeit of commodities depresses prices and stokes concerns of deflation. Global wealth--estimated by Credit Suisse at around $263 trillion, more than double the $117 trillion in 2000--represents a vast supply of savings and capital, helping to hold down interest rates, undermining the power of monetary policy. And the surplus of workers depresses wages.

Give the people who need the money, since there's less need for labor, the excess money, created by decreased labor costs.

Posted by at April 25, 2015 12:10 PM
  

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