Sense on cents implies that capital and liquidity will flow to areas in which it is protected and can generate a reasonable rate of return.
Thus the question facing our nation is why all the liquidity injected into our system has not gained traction and promoted job growth and increased economic activity. Although I have written voluminously on this issue over the last two years, let’s allow Richard Fisher, the head of the Dallas Federal Reserve, to weigh in with his version of sense on cents.
Bloomberg highlights Fisher’s forthright and honest analysis in writing, Fed’s Fisher Sees U.S. Economy Expanding Near ‘Stall Speed‘,
Many of the corporations he surveys “report that the most effective way to deploy cheap money raised in the current bond markets or in the form of loans from banks, beyond buying in stock or expanding dividends, is to invest it abroad where taxes are lower and governments are more eager to please.”
Interesting. Lower taxes and government that appreciates capital formation and utilization. Fairly simple, no? Basic business or I should say, ‘sense on cents.’