America’s Stalwart Savers Get the Sucker Punch

By Karen Petrou

Recently, I had an op-ed in the Financial Times arguing that negative rates make it even harder for moderate-income households to accumulate wealth.  The reason, I said, is simple:  when savings-deposit or similar rates are ultra-low or even negative in real terms, households that save get poorer and poorer both on their own and in comparison to wealthier households with more sophisticated financial-asset investments.  This might seem irrefutable, but the article generated hundreds of comments.  Many were positive but more than a few countered that lower-income households don’t have savings so savings rates don’t exacerbate economic inequality.  To my mind, this is like saying that poor people are already thin so the fact that they don’t have enough food doesn’t matter. Continue reading “America’s Stalwart Savers Get the Sucker Punch”