Monday, July 9, 2012

What is the real interest rate telling us?

Here is a blog post by Martin Wolf of the Financial Times discussing the real interest rate (the post is a few months old, but still worth reading and discussing. 

On area that is starting to gain a lot of attention on main street is the erosion of retirement savings. In response to the financial crisis interest rates have fallen to record lows (short-term rates by the Fed, long-term rates due to global uncertainty and savings glut). A low nominal rate combined with modest inflation (1-2%) has left many retirees earning 0% (and in some cases negative). At the same time, many of those over 45 have benefited from low taxes, a dot com bubble, and a housing bubble.

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