Commentary
Taking risks is no longer necessary to make a return on your savings.
Not long ago, “cash is trash” was a common theme as savings accounts yielded zero. Of course, such was the intent of the Federal Reserve following the financial crisis of 2008–09 in the hope that inflating asset prices would trickle down into economic growth. Given the economy is driven by consumption, the Fed believed that promoting asset inflation would lead to increased confidence, thereby creating economic growth. Such was the exact point made in 2010 by former Fed chair Ben Bernanke:
“Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”…