Could wealth accumulation by the rich in the United States have contributed to a savings glut so great that it has forced down interest rates? The inexplicably low cost of borrowing that has persisted worldwide for nearly two decades is often attributed to demographic forces, as workers in countries with aging populations, such as Germany and Japan, save for retirement. Ben Bernanke ’75, famously referred to a “global savings glut” in 2005, before he was appointed chairman of the Federal Reserve Board, to explain the flows of capital into the United States from savers around the world. A similar demographic explanation for low rates has been applied domestically, where saving by baby boomers, it has been argued, has contributed to a national savings glut, and a corresponding rise in the prices of assets ranging from equities to homes. But now, even as the boomers enter retirement and begin spending their savings, the domestic…
