Meanwhile, prudent savers have seen the interest on their savings drop from over 5% to 3-4% and declining.
Not if they got short. The fundamental lesson that should be developed from this whole crisis, is that the meaning of savings is changing. The rate at which things are considered investments is changing and that is not likely to slow down.
The only reason any investment isn’t a liability is that someone will give you something you want for it. Now sure, from time to time specific investments go out of favor, pets.com anyone? Whats changing now though are perceptions of whole classes of investment, to liability. To me, govt debt, which most people consider prudent savings is the worst “investment” after real estate. The govt has a vested interest in making sure it doesn’t pay those dollars back, in real terms, plus the ability to make it happen.
Prudent savers are those who see whats happening and adjust their outlook accordingly. I’m a prudent saver. I live below my modest means, and invest according to a belief that the fundamental nature of what is an investment is changing, hence the being short.
