Maybe you can explain your reasoning?
It seems to me that wealth transfer has been AWAY from savers. Basically, they are getting zero (or worse) interest on their $$. This also has the effect of driving savers to riskier investments, such as the stock market. This has helped to pump up the stock market.
The US Gov has been doing quite well, because we are financing our massive deficit for almost zero. IMHO, that is what has been driving this train. IF the US had to pay reasonable interest rates on our deficit, the Entitlement State would be bankrupt quickly. The Federal Reserve has manipulated things to keep this from happening. If the stock market goes down, pension fund become insolvent and the house of cards starts to collapse
This, of course, assumes that deflation is in the cards.
If hyperinflation occurs, then just about everyone is screwed. (Maybe the gold bugs were right...)
Good point. Real interest rates have been negative (i.e., inflation is greater than the return rate on savings) for a number of years. However, the author's argument makes some sense in a deflationary, rather than inflationary, environment.
If the dollar soars, you can convert it to some foreign holding... oil... castles... foreign stocks. But, here, timing becomes important.
Another caveat: Look at the dollar index, (symbol DXY on some systems). A move of plus or minus 10 percent is huge, but won't change most savers' net financial positions, because they won't know when or how to take advantage of the swing.
“Maybe you can explain your reasoning?
It seems to me that wealth transfer has been AWAY from savers. Basically, they are getting zero (or worse) interest on their $$. This also has the effect of driving savers to riskier investments, such as the stock market. This has helped to pump up the stock market.
The US Gov has been doing quite well, because we are financing our massive deficit for almost zero. IMHO, that is what has been driving this train. IF the US had to pay reasonable interest rates on our deficit, the Entitlement State would be bankrupt quickly. The Federal Reserve has manipulated things to keep this from happening. If the stock market goes down, pension fund become insolvent and the house of cards starts to collapse”
More truth in this post than I can begin to explain.
We are behind the power curve, financially.