Why Low Interest Rates Are Hurting the Poor

Charles Gave, co-founder of Gavekal is one of the top institutional investment advisors in the world and I love reading his articles and his article on April 26th was titled “Low Rates are Socially Regressive.” He believes that central bankers “relying on low rates to stimulate structural growth is about as smart as imposing rent control as a way to boost housing supply.”

Why? Low long-term rates lead to falling productivity and rising asset prices that only benefit the rich. And these low rates “depress the real earnings of the working class.” Why? Long-term low interest rates cause greater inflation on 3 core prices that hit the poor the hardest—food, energy, and rent he says as the poor’s rate of inflation is 3.3% since the early 2000’s or about 50% higher than the overall inflation rate.

He says the “Keynesian policies have never really worked for the ‘little people’”. Keynes was a famous economist from the Great Depression whose ideas have re-infilitrated the Fed and many top economic universities and one of our political parties.