How QE Discourages Hiring

1 post / 0 new
#1 Mon, Jun 2, 2014 - 8:52am
hampton, NH
Joined: Jun 24, 2013

How QE Discourages Hiring

Artificially low interest rates encourage companies to use their cash to buy back their own shares to drive up their share prices, rather than to invest in their businesses. This explains why the economy is showing limited growth but the stock market is hitting record highs. According to CapitalIQ data, the single biggest buyer of stocks in the first quarter was not a mammoth hedge or pension fund, but the companies of the S&P 500 itself, which cumulatively repurchased a $160 billion of their own stock.

When companies make the determination that they get a better and more immediate return on investment in the form of higher share prices from buying back their own shares than hiring new employees or making capital investments in their business, workers are not hired and additional productive capacity is not built. Buying back shares often offers a company the greatest return on investment.

Edited by: Smaulgld on Nov 8, 2014 - 5:01am
Become a gold member and subscribe to Turd's Vault


Donate  Shop

The TFMR Silver Round
Doc and TF Partnership Advertisement

Recent Comments

by NW VIEW, Jan 19, 2019 - 11:59pm
by Mickey, Jan 19, 2019 - 11:46pm
by NW VIEW, Jan 19, 2019 - 11:21pm
by mavens, Jan 19, 2019 - 11:08pm
by DeaconBenjamin, Jan 19, 2019 - 10:15pm