There is totally a causal relationship between profits and investment: either you reinvest the profits or you don't. And if a huge pile of profits rolls your wa

There is totally a causal relationship between profits and investment: either you reinvest the profits or you don't. And if a huge pile of profits rolls your way... you might not be able to reinvest all of it. Yes, you are right, it can be thought of as a lack of demand. But if the cost of production is plummeting, due to automation, and profits soar... then you would need equally soaring demand to meet it. In this vein, Larry Summers is right with his call for fiscal policy. He is just repeating what Keynes said many years ago -- the government should be the spender of last resort. But this is a race to the bottom (or the top?). How do we stimulate so much demand to keep up with this? Then there is Piketty -- the return on capital outpaces economic growth, and therefore wealth inequality gets worse with time. He proposes we should instate a global wealth tax. This is more along the lines of what you are saying. But his solution doesn't necessarily solve the demand problem. It just solves the wealth problem directly. We don't know, with a global wealth tax, what the impact on demand really will be. Maybe it would lead to a massive deleveraging of consumer and student debt. Demand isn't ultimately the problem... the economy is functioning pretty well. We can make the things that need to be made in the quantities they need at reasonable prices. The problem is the wealth distribution in itself. As for the Fed only caring about inflation in the last 20 years: https://en.wikipedia.org/wiki/Paul_Volcker https://en.wikipedia.org/wiki/Paul_Volcker