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– moneysense.ca
The rich get richer as rates go lower
We know that lower rates set by central banks help to stimulate economic growth by providing cheap money. On the flipside, banks also have the option to raise rates and quell too much economic euphoria that might also create undesirable inflation.
The COVID-19 pandemic has unfairly picked on the economically disadvantaged—and it appears that the monetary response of lower rates could further exacerbate wealth disparity.
If you want to do more of a deep dive (it’s very interesting, to say the least) into global demographic trends and interest rates and how they’ve shaped our past, and will likely shape our next few decades, check out “Inequality, Interest Rates, Aging, and the Role of Central Banks.”
From that link, Matthew C. Klein looks at the topic of savings rates of the rich and how they do not spur real economic growth, but rather drives down rates…
“The key insight is that the ultra-rich are different from you and me: they have much higher saving rates regardless of their age…
