This morning you read about Bernanke’s attempt to ruin savers for being conservative. I teased that this view might be short sighted. The exciting conclusion starts now.
The Federal Reserve may be punishing savers, but that might be the right thing to do. No this isn’t a rant about encouraging you savers to start spending again. I’m with most personal finance bloggers and believe we can’t spend our way back to a healthy economy.
In the last year and a half the value of the stock market has tanked. This has been a result of two things. For one thing the values of the companies have tanked due to bad investments and companies not making profits. However the other reason stocks are so low is because investors pulled their money out. Fearing further bad news investors turned their money into cash by selling their stocks. An increase in selling drives the price down further.
There have been estimates that as much as a few trillion dollars are sitting on the sidelines waiting for the right time to move back into the market. By scaring people into thinking their cash is no longer as safe as it was, perhaps they’ll move back into the market. Moving back into the market is exactly what everyone has needed from the beginning to restore investor confidence.
Is this one tiny alien away from a conspiracy theory? Sure. But that is why I have a blog, and not a PhD.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
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