Did The Fed Just Admit to Deep Uncertainty About Our Financial Security In Retirement?

Wednesday, April 1, 2015
By Paul Martin

By: Daniel R. Amerman, CFA
GoldSeek.com
Wednesday, 1 April 2015

Generally speaking, the chairperson of the Federal Reserve is treated by the mainstream financial media as being the very paragon of respectability. If the Fed says it – then the voice of economic authority has spoken, and we need to listen carefully.

Yet, recent comments by Janet Yellen have instead made her a source of “controversial” economic ideas, with some financial reporters and their editors apparently feeling a duty to protect their reading audience – and let them know this is not acceptable economic thinking, but rather is “far outside the mainstream.”

Now what could the head of the world’s most powerful central bank possibly say that would get the mainstream media to try to flip the narrative upside down, and turn her from the heart of authority to being a holder of unreliable and perhaps even fringe ideas?

Chairwoman Yellen’s offense was to openly speak the truth about an issue that has been widely discussed by some of the leading economists around the world over the last couple of years, which is the concern about “secular stagnation”.

As described in the CNBC article linked here, secular stagnation is an academic concept that has been around since the 1930s, and the article frames it as an “obscure” topic that correct-thinking economists don’t worry about today.

What is not discussed in the various media articles is what matters, which is the wide ranging and potentially life-changing implications for all of us. For if it does turn out to be secular stagnation, then bond returns remain very low, stock returns fall, the chances for a new financial crisis increase, the risk of pension insolvencies increases, retirement standards of living fall, and the financial viability of Social Security and Medicare is undermined as well.

Why Secular Stagnation Matters To All Of Us

The Rest…HERE

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