Overheard Investment Theory

Who hasn’t read, heard or viewed a commentary on the investment activity (or lack of it) that is currently taking place. Well I heard a great one recently and I thought I should pass it along. This theory being purported is so mind boggling that it is credible; however I’ll leave that up to you to decide.

Well here goes; the main contributing factor that capital investment is not flowing into economic activities that could grow the economy (read create jobs, etc.) is the fact the people controlling these resources are not willing to invest into such an uncertain (read headed toward socialism) political environment.

So the controlling parties that are hanging onto their wealth are unwilling to create new economic entities, invest in new innovations or rebuild the infrastructure of the economy because the government can’t be trusted. The envisioned socialist movement in government has taken away any incentive to invest. Heh, Washington, DC the so called money people are worried about your motives. So this explains it, the money will sit on the sidelines until the political climate changes. Makes sense, I guess.

Well the only problem I see with this thinking is that it is absolutely ridiculous. Why you ask? I am sure that a lot of people are not happy with the current movements in government. ‘Those SOBs in DC are going to take away everything’, is the thinking. One big problem with this train of thought, if the investment dollars that could revitalize this economy are sitting on the sidelines, what sidelines are they sitting on. Yep you guessed it, with the same government (in the form of Treasury Bonds) that they have no faith in to begin with. So you mean to tell me that you are not going to invest in the economic arena that is overseen by government you don’t trust, but you are going invest in the government itself. If you believe the current government is somehow going to take away your capital invested in private sector, what do you think they are capable doing with that same investment in their hands?

Tie your shoes and hang on; this story is only going to get more interesting.

Dr Q