Paul Krugman

@paulkrugman ↗

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Last Checked Sept. 23, 2020

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Wed Sep 02 12:01:50 +0000 2020

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Paul Krugman @paulkrugman

But this assumes that profits are a return to physical capital — which in some industries they are. But what if they're largely rents reflecting some kind of monopoly position? Then lower interest rates won't lead to investment that reduces these rents. 6/ — PolitiTweet.org

Posted Sept. 2, 2020

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Paul Krugman @paulkrugman

Instead, the argument is that higher valuations relative to the replacement cost of capital will induce investment, which drives returns down over time. And markets will supposedly take those future effects into account, limiting the initial rise 5/ — PolitiTweet.org

Posted Sept. 2, 2020

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Paul Krugman @paulkrugman

And of course that's a good description of the tech giants whose stocks have soared most. So a good guess is that at least part of what's going on is that long-term pessimism has reduced interest rates, and this has *increased* the value of stocks issued by monopolists 7/ — PolitiTweet.org

Posted Sept. 2, 2020 Hibernated