Great Time to Turn a Nest Egg into Scrambled Eggs | Wolf Street

We are in the miraculous process of borrowing and printing ourselves to prosperity or whatever. Short-term interest rates on essentially risk-free money, such as US Treasury bills or insured bank deposits, are near zero. For folks in many countries in Europe, they re below zero. Long term risk-free interest rates are below 1% in the US and below zero in some other countries.

With the Federal Reserve leading the charge, central banks have jumped with both feet into the let-inflation-run-hot dogma. Inflation means the destruction of purchasing power of the currency, and thereby the destruction of purchasing power of labor paid in that currency.

This is no biggie at the top, where folks get raises to the tunes of millions of dollars. But it s a biggie for the lower 50% on the income scale. For them, the dogma of letting inflation run hot is going to be very tough. And as inflation saps the purchasing power of their incomes, they ll cut back.

And for investors, the thin income streams from low-risk investments are not nearly enough to compensate for the loss of purchasing power of that investment due to inflation.

So, to dodge these issues, let s put or keep our hard-earned nest egg in the stock market?

via wolfstreet.com