Cheap Debt for Corporations Fails to Spur Economy

The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.

Bob

Bob,

Excessive debt caused by cheap money created the problem of lackluster economic growth. Cheap or cheaper money; therefore, cannot be the solution to the problem.

Eric

Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.

Source: nytimes.com