Young Research & Publishing Inc.

Investment Research Since 1978

  • About Us
    • Contributors
    • Archives
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investing Analysis
    • The Efficient Frontier
    • Bonds
    • Commodities
    • Currencies and Gold
    • Dividend Investing
    • Economy
    • ETFs & Funds
    • Investment Strategy
    • Real Estate
    • Retirement Investing
    • Stocks
    • Taxes
    • Facebook
  • Money Management
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Ready for the Cycle of Decay?

August 19, 2016 By E.J. Smith

In an extensive op-ed in Financial Times, Bill Gross details how today’s low yields threaten to cause a cycle of stagnation and decay. Gross and I agree that the low yields will have a detrimental effect on pension funds (read here, here and here). Gross takes it a step further to the knock on effects of what poor pension fund performance will mean for corporate profitability and ultimately the economy.

There are other obvious drawbacks to near-zero yields and interest rates. Historic business models with long-term liabilities — such as insurance companies and pension funds — are increasingly at risk because they have assumed higher future returns and will be left holding the short straw if yields and rates fail to return to more normal levels.

The profits of these businesses will be affected as will the real economy. Job cuts, higher insurance premiums, reduced pension benefits and increasing defaults: all have the potential to turn a once virtuous circle into a cycle of stagnation and decay.

Central bankers are late to this logical conclusion. They, like most individuals, would prefer to pay later than now. But, by pursuing a policy of more QE and lower and lower yields, they may find that the global economic engine will sputter instead of speed up. A change of filters and monetary policy logic is urgently required.

Bill Gross- Yellen Should Get Off Lower-Rate – 11 Aug 16

The following two tabs change content below.
  • Bio
  • Latest Posts

E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.

Latest posts by E.J. Smith (see all)

  • Americans Want to Leave Their High Tax States - February 21, 2019
  • National Right to Work Could Help States That Can’t Help Themselves - February 20, 2019
  • Democrats Sign on for $1.5 Trillion Tax Hike - February 19, 2019

Related Posts

Our Most Popular Posts

  • Do You Have What it Takes to be a Great One?
  • The Power of a Compound Interest Table
  • What Are You Getting Paid?
  • Can You Rely on Income Funds?
  • Surprise: Battery Powered Cars Don't Work Well in Extreme Temperatures
  • Democrats Sign on for $1.5 Trillion Tax Hike
  • What Do You Need to Do Before You Retire?
  • Your Retirement Life: What States Did Americans Flee in 2018? Where Did They Go?
  • Is Your State Winning or Losing the Tax Game?
Fidelity: #1 Online Broker

The Global Bear Market

American Factories Booming

Is This Just the Beginning of the FAANG Collapse?

My Concentration Is on Full Faith & Credit Pledge U.S. Treasuries

This is What Can Happen When You Invest Without a Margin of Safety?

Search Young Research

RSS The Latest at Richardcyoung.com

  • A Prison Sentence for Former FBI Deputy Director Andrew McCabe?
  • Bernie Sanders Plan? Redistribution, not Retirement Savings
  • Americans Want to Leave Their High Tax States
  • Will Trump Reject the Neocon Case for Involvement in Iraq?
  • Welcome Back Glorious Hotel Lutetia in Paris
  • National Right to Work Could Help States That Can’t Help Themselves
  • A Widening Ideological Gulf
  • Is Crazy Bernie Radical Enough for Today’s Democrats?
  • RIP Karl Lagerfeld
  • Democracy: The Most Dangerous and Insidious Effect of Majority Rule.

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Social Media

  • Facebook
  • Twitter
  • Youtube
  • Pinterest

Copyright © 2019 | Terms & Conditions