Gross: Savers to Be Disadvantaged for Years

The Federal Reserve will be on easy street for a long time to come. Real interest rates will remain low or negative, meaning debtors will be favoured over savers. Investors in fixed–income will take it on the chin.

Bill Gross had some comments on this prospect in an interview on Bloomberg Television. Video below.

My take: the US savings rate will remain low because of the skew in favour of debtors. With private sector debt levels still high, that means future US recessions will be events of extreme levels of private sector deleveraging and public sector deficits.

See Steve Keen on a Double Dip and Private Debt

  1. Panayotis Economopoulos says

    There is no need for savers to loose if the liquidity risk is zero as they can collect the risk premium which in these circumstances of relative recession is higher overcompensating for the absence of liquidity risk!

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