The low interest rates and thus negative incentive to save is an effort by the Federal Reserve to maintain the consumer economy. In recent years the American consumer has been about 70% of GDP. But, the ingredients for a consumer economy are not there anymore. The main ingredient is credit and applicants owe too much already. People cannot qualify for credit by by any reasonable and prudent standards. Another ingredient is net worth. Baby boomers and their heirs do not have assets. The other ingredient is high unemployment. If you don’t have a job you are automatically unqualified. The consumer era is over. Transitioning out of the consumer age will still keep unemployment high for a long time. We don’t have the right stuff for consumerism anymore. Wonder when the Fed will pick up on that?
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AuthorBill Bays Archives
April 2016
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