Small Investors Just Proved Why Fed’s ‘Wealth Effect’ Is Bogus

Kiersten Marek:

Some interesting analysis on why the “wealth effect” is not happening, and statistics on how little the American public knows about recent events in the stock market.

Originally posted on Your Newsline Independent Reporting From Around The World :

The American public is astute about a lot of things, but the stock market – despite all the hoopla in the media and even on NPR – apparently isn’t one of them. That’s what the Wells Fargo/Gallup Investor and Retirement Optimism Index survey found.

And it raises some thorny issues about the Fed’s strategy to print a few trillion dollars and force interest rates down to near zero in order, as it said, to inflate stocks and other financial assets, thereby triggering the “wealth effect,” which would stimulate the Main Street economy. This is, of course, precisely what has not happened. And the American investing public just told us why.

The survey asked American investors with $10,000 or more in stocks, bonds, mutual funds, or in a self-directed IRA or 401(k) – so not the entire American public but only those who have a stake in the markets – to comment on…

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