Keynesianism

[Earnie]

Hello everyone,

Below is the Larousse definition of a rentier:

Rentier

Beneficiary of an annuity, linked to the ownership of a rare resource, whose income does not depend on the work of its owner or the risk incurred.
A landowner who owns the land and rents it to farmers, the heir of land who sells it to a real estate developer, the holder of financial securities who is content to passively receive interest or dividends... are rentiers.
JM Keynes advocated the "euthanasia of rentiers", whose parasitic or speculative behavior, according to him, reduces the share of income devoted to productive investment in wealth and jobs.

Given the Keynesian policy of the United States (therefore of the FED) and of the Euro zone (therefore of the ECB), what should we think of what is looming for rentiers?? See below an article from the excellent "forum-monétaire.com"

More and more central banks are setting negative short-term interest rates, with the dual aim of maintaining the competitive devaluation of the currency they issue and of allowing the States in which they operate to stop paying interest on the national government bonds that underlie these currencies, which is in principle likely to reduce their budget deficits. This policy of maximum financial repression should not be accepted by investors who therefore have an interest in investing in, or holding only, assets offering a positive cash flow. This is why we remain optimistic about the continued rise in US government bonds (TLT, TMF, etc.), which will soon be the only ones to offer positive cash flow and whose rates offered are the highest of the major countries, hence the interest in buying them while they last, and consequently on the rise of the US dollar against most other currencies (including the Swiss franc, which has long ceased to be a safe haven asset) and against gold (which only rose this year due to massive short covering, but which has probably already reached -silver metal too- its highest level for 2015 and whose probability of falling is at its maximum). There are of course also some shares of large international companies that offer positive cash flow, but the US stock indices are still in bearish head and shoulders formations.

Keynes advocated the "euthanasia of the rentier", and today's central banks are in the process of realizing it. Do you love your government so much that you finance it for free and also pay it something when you buy European government bonds (Swiss, Danish, etc.) bearing negative rates, whose currencies in which they are expressed are falling against the US dollar? Do you love chocolate so much that you buy corporate bonds, such as Nestlé's, which also bear negative interest rates? Since negative interest rates are a hidden tax, there is no reason to accept them.

[Jerome]

Transmission of thoughts… I am preparing an article on a similar subject…
There will always be rentiers, even with negative rates. You just have to choose the right investments
and then I'm not against euthanasia of the rentier, some people have to work... as long as it's not me

[Earnie]

hahahaha good answer! Great article, I'm looking forward to it! But it also deserves to adapt your strategy over time and economic contexts. Even if you plan to invest in the long term, it doesn't necessarily mean freezing your strategy forever. Things change, and the human being's ability to adapt remains his best weapon to bounce back, and not get caught in a trap. The best would even be to anticipate according to the various signals emitted by political economy, geopolitics, and fundamental analysis, and human psychology... All in all, fascinating!!

[Author]

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