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August 2, 2021
The chairman and CEO of the world’s largest asset manager Blackrock told CNBC on Wednesday that he worries about a “silent crisis of retirement,” citing global monetary policies that create disincentives for savers.
“Unquestionably, as central banks keep rates low, or negative in Europe, the savers are getting slammed,” BlackRock co-founder Larry Fink said on “Squawk Box.” He added, “Asset owners are the biggest beneficiaries of monetary policy, and this is why I think a year ago, two years ago, I talked about we needed more fiscal stimulus and maybe less monetary stimulus.” Fink said he believes people are beginning to put money to work in the stock market, instead of keeping it in a lower-risk investments or savings accounts.
The effective federal funds rate has been below 2% for much of the post-2008 financial crisis period, with the exception of between October 2018 and September 2019, according to historical data compiled by the St. Louis Federal Reserve. “Many of the savers are now more confused, and I think some of them are now, finally, entering into equities and other asset categories as a part of it,” said Fink, who noted he’s long advocated for 100% exposure in stocks, not that he “predicted where monetary would be.”
In 2018, Fink told CNBC at the time most people saving for retirement should have the bulk of their portfolios in stocks rather than bonds, even those as old as 50. “We are going to have to address what I would call the silent crisis of retirement,” Fink said. “People are going to have to, unfortunately, whether they like it or not, they may have to work longer because they’re not earning the same returns on their savings.” Fink has suggested that the standard retirement age in the U.S is moving higher.
ARTICLE: PAUL MURDOCH
MANAGING EDITOR: CARSON CHOATE
PHOTO CREDITS: CNBC