‘Real’ returns for savers heading close to negative

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There are growing signs that the global economic slowdown is for real. We must consider the consequences. $13 trillion of bonds in issue with negative yields. We rarely think in any depth.

From the Fisher equation it can be seen that achieving a zero nominal interest rate implies an inflation rate approximately equal to the negative of the real rate of interest, which suggests deflation of about 2-3 percent per annum.

Meanwhile, the rate of return on easy access savings accounts are as low as 0.01% a year – creating little incentive to save. Analysts were particularly gloomy about the plight of savers. real has.

In the United States today, short-term real interest rates are negative, as US inflation is positive but interest rates are still close to zero. If you have a bank deposit or a bond denominated in dollars at a close-to-zero nominal interest rate, your savings are losing value in terms of what you will be able to buy for them in the US over time.

Negative yielding. both equities and Real Estate as the costs of borrowing money no longer affect asset prices. However, especially in the United States, we are nowhere close to that paradigm.

Savers are finding it very difficult to protect the value of their savings, let alone to get any real return on it. The government no longer issues index linked National Savings to give people a low risk way of protecting the value of their money. Index linked gilts offer a negative real return at current prices.

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House prices jump 5.2% but overall property picture is ‘stable’ Democrats to stage hearing tying Brownback’s Kansas Experiment’ to GOP tax plan kansas’ controversial tax cuts will get the Washington spotlight Wednesday as Senate Democrats conduct a partisan hearing to draw national attention to the political and financial mess they say.2016, up from 5.2% a year earlier (figure 4). The overall picture is one of stable or rising prices, despite the global landscape of political and economic uncertainty. The number of housing markets recording price rises has increased from (43 in 2015 to 47 in 2016). With higher inflation and diverging monetary policies expected in 2017, we