There's absolutely no reason, why the productivity should fall, globally, in an expansion. It's an aberration. 2/
Productivity grows through profitable investments, which drive wage growth. Investments... 3/
The total factor productivity (TFP) is simply the growth in gross domestic product not explained by increases in labor quantity, quality and capital services.
And so, it falls during recession and crises, when investments flag. 4/
The most likely explanation, as detailed in the thread below, is that ultra-loose monetary policies and debt-stimulus, applied during the past 11 years, destroyed our #economy. 5/
When we borrow from the future, to invest, the interest rate reflects the price of the money from the future. 7/
1) Money is only available to potentially profitable investments.
2) All non-profitable investments fail, as they are unable to master the income stream needed to pay the "time preference of money".
What happens with very low or negative interest rates? 8/
What this means then? 9/
Secondly, capital is tied to non-profitable investments, which do not fail, suffocating the funding for new and potentially more profitable investments. 10/
When rates are extremely low and cheap money abundantly available, there are more and more unprofitable firms, and thus the productivity of the overall economy starts to fall. 11/
Unproductive firms multiply, while we go deeper into debt. This means that our ability to pay back the debt diminishes further.
This is no way to "invest for future generations"! 12/
It's completely ill-advised!
I understand that it's...13/