What’s the point of saving if the yield is below 2%/year before taxes? HSBC has recently dropped the APY of my formerly “high-yield” savings account to 1.45%. Might as well spend that money on a shiny new toy.

If yields get back to 5%, people will start saving more.

And a more general thought. There isn’t much demand for investment in the United States (in Europe, too). Especially now that the housing bubble is over. Investment demand is normally created when big companies issue bonds to finance some kind of expansion. Who needs to expand in the developed world nowadays? Do we not have enough malls? Do we not have enough cars in every household? Do we need TWO big screen TV’s in every room instead of one?

Aside from the government spending on infrastructure and healthcare, I don’t really see much potential for investment in this country, or elsewhere in the developed world, any time soon.

The real place where you might want to take your dollars is BRIC. (Minus Russia, which has deep geographical problems that prevent large-scale industrialization, and so it should not be grouped with the other three).

Problem is, as far as I know, it’s not even possible to invest in Chinese and Indian bonds unless you live there.