The
U.S. Federal Reserve has seen to it that its monetary policy has the
cost of money within the banking system down to zero. And liquidity
is the number one priority. The rest of the world’s central banks
are on the same cheap money craze.
The bottom line for the U.S. and world economies: It’s hard to call the ongoing central bank objectives very successful.
But one fact is certain. The small U.S. investor is getting the short end of the stick. If he wants minimal risk, he is going to earn 1% or less for a reasonably, minimal-risk investment. This is well below the inflation rate reported by the U.S. government and far, far below the actual rate of inflation that’s never officially disclosed, except at the supermarket checkout counters.
The stock market is always iffy in a stagnating, inflation-prone atmosphere. More sophisticated investors can look to the corporate bond market, provided they are familiar with “duration” principles. (See the Earl J. Weinreb NewsHole® comments.)
The bottom line for the U.S. and world economies: It’s hard to call the ongoing central bank objectives very successful.
But one fact is certain. The small U.S. investor is getting the short end of the stick. If he wants minimal risk, he is going to earn 1% or less for a reasonably, minimal-risk investment. This is well below the inflation rate reported by the U.S. government and far, far below the actual rate of inflation that’s never officially disclosed, except at the supermarket checkout counters.
The stock market is always iffy in a stagnating, inflation-prone atmosphere. More sophisticated investors can look to the corporate bond market, provided they are familiar with “duration” principles. (See the Earl J. Weinreb NewsHole® comments.)
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