Economics 101. Which way is up?

The U.S. economy is between a rock and a hard place. U. S corporations have drastically slashed labor costs in domestic facilities and shipped many jobs overseas to lower wage venues. As a result they have accumulated large hoards of cash
which will increase as the economy gradually improves. If concerns about regulatory and fiscal policies keep them from investing in growth and new employees they will be
inhibiting growth in demand. That is self defeating and a recipe for losing market share to foreign competition.

A certain amount of regulation is necessary to eliminate deceptive practices and dangerous products as well as predatory anti-competitive strategies. The results would be a more stable business environment and greater confidence among consumers.
But regulation must be tempered in amount that will not make our industries non competitive with more permissive societies.

As for tax increases, low taxes which lead to deficit government spending impose the cruelest tax of all by devaluing the dollar. That increases the cost of raw materials, makes our imports more expensive and decreases the purchasing power
for average consumers. In theory it should increase our exports, but our largest trading partner and potential customer, China, manipulates its currency to keep out our products so our massive trade imbalance remains. And we are reluctant to pressure them because we need them to finance our debt.

Instead of hunkering down and hoarding cash business should aggressively invest
in new technology in production and new fields in the coming green revolution.
They could then return to our shores manufacturing operations which were sent offshore earlier. In time the relative wage advantages abroad would narrow anyway as
their economies and public expectations mature. Sitting tight and hoarding money puts us further behind foreign competition every day.

Will our economy turn up significantly in the near future? It is any one's guess.
Mine is "not likely" without a major effort to adjust to the new realities of a less powerful and less affluent nation. We concentrated on being bigger and more powerful, but neglected to become better and smarter.
So, if banks can borrow from the Fed at near 0% and buy bonds yielding 5-8% they will stay out of the business of providing capital to new enterprises. And if the old enterprises find it more profitable to invest in paper rather than humans, economic recovery is a distant dream. Why not tackle the new challenges to work
smarter, to green the planet with new techniques. new products and new visions?