By Jon S. Strebler
One of the reasons behind the stock market’s amazing run from 2009 to the present is the scarcity of decent returns on investments and savings elsewhere. Over many decades, a rule of thumb is that a person could usually get 4% or so risk free at the bank, and a couple of percent more than that on good quality bonds. Those returns disappeared several years ago, as the Fed and other central banks slashed interest rates in a desperate (and successful) attempt to keep the Great Recession from spinning out of control. Now the US economy is very healthy for the most part, as evidenced by the latest unemployment number of 5%, a.k.a. “full employment,” and other signs of a markedly improving labor market.
But still the rates are in Great Depression mode, out of an abundance of caution that the economy will stumble without its seemingly-requisite ... Log in or subscribe to continue reading.