03/20/2016 - Yra Harris: Savers & Pension Funds Are Getting Shafted By Central Bank Policies
“There are many news stories circulating about the severity of the underfunded public pension funds. It seems that the ultra-low yields on sovereign bonds are preventing pension funds from meeting their funding requirements, especially as equity markets have been roiled by extreme volatility, which has led to diminished returns. Many pension funds have covenants preventing the use of high-risk assets and thus are subjected to the REPRESSIVE YIELDS SET BY CENTRAL BANKS. Fed Chairmen Ben Bernanke and Janet Yellen have told the ‘complainers ‘ to silence themselves about low yields because there have been many benefits to the policy of financial repression: Housing prices are higher; equity markets have risen dramatically; your grandchild or neighbor has a job and so on. But the bottom line is that the burden has fallen on middle class savers as their pensions have been the recipients of the Fed’s financial repression. It is not the wealthy who live off pension fund cash flows. This is a classic case of what Fyodor Dostoyevsky so beautifully detailed in the chapter from the Brothers Karamazov, “The Grand Inquisitor.” The story is the object of authority, miracle, mystery for it is the Fed’s authority that allows it the miracle of levitating the equity markets and its financial repression is but a mystery. After all, the FED has created the ultimate perpetual money machine as it earns profits that are handed over to the U.S. Treasury. So ends another week where we are hypnotized by the government’s ability to take our BREAD with the left hand and return the bread with the right hand and we buy more of the value stretched assets.” – Yra Harris
