Why the Fed is to blame for the boom in zombie companies

Financial Times/Andrzej Rzonca/8-10-2022

“Zombie companies — businesses whose operating profits are persistently lower than their interest payments — have something in common with high global inflation. Surprisingly, the root cause of both is the Federal Reserve.”

USAGOLD note: The Great Enabler zombified about 10% of the public companies in the United States, according to this FT report, to what end we can only guess. Rzonca red flags a problem largely overlooked when rates were low. Now that they are rising and rising rapidly, a major shakeout may be in the offing.

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