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Sure, I think I understand the spirit of your point and agree that a healthy economy relies upon capital circulating through the system. That said, there is a w
by spking 7y ago
Sure, I think I understand the spirit of your point and agree that a healthy economy relies upon capital circulating through the system. That said, there is a wide spectrum of people with different financial situations and risk appetites. There are lots of institutional and individual investors who are in a better position to take on the risk of putting their low-yield savings into equities and accept significant volatility. The small-time saver who is desperately trying to break out of the rent cycle is probably not going to have the stomach for that, and I don't think that is the cohort that is going to impede the free flow of capital into and out of the stock market anyway.
- AnthonyMouse 7y agoSmall time savers don't get higher interest rates on their savings accounts than institutional investors. If you give high guaranteed interest rates on savings accounts during turmoil, all the money goes there, which is problematic. Investors get paid to take risks. The less risk you want, the less you get paid, and there is a point at which you're taking so little risk that you get paid less than you lose to moths and rust. During hard times, the level of risk required to get a positive return is higher.