U.S. corporations are holding record-high amounts of cash. One reason has to do with taxes—both the uncertainty about future taxes and the reality of today’s tax rules. The second reason has to do with the rise of research and development; because of its uncertain nature, this sort of work requires access to high levels of cash.
The economy has increased its demand for high-skilled (high-wage) workers, while opportunities for middle-skilled (middle-wage) jobs have declined. This “job polarization” may require a shift in the sort of training that is encouraged for American workers.
It is not uncommon to observe negative interest rates during uncertain times, when investors flee to safety. But the existence of negative market yields provides no support for policies in which central banks set negative interest rates on deposits held at a central bank.
The buildup of mortgage debt before the crisis and the subsequent deleveraging have had profoundly different effects on different age groups. Younger families generally experienced the most volatility, while older families emerged with the largest net increase in mortgage debt.
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