Originally Posted by Khufu
It may very well be that interest rates return to the levels prevailing prior to 2008, but I am skeptical of the widely held belief that such an outcome is inevitable and even to be followed by inflation. The US could follow the example of Japan and face a very low interest rate environment for a generation or more. I stop short of making that a prediction, but I think it is quite possible.
I do agree that in the face of unresolvable uncertainty diversification is necessary. However, few retiree investors will include SPIAs in their allocations despite their genuine advantages.
I also feel that a Japan like scenario is a very likely prognosis. Governments have developed very effective tools for dealing with inflation. A debt driven deflationary environment is much tougher because historically the only cure is massive investments far beyond what any rational, prudent populace would stand for. The only cohesive force to motivate a population to support this level of investment is large scale war. Todays technology makes such large scale war (thankfully) unlikely. Little wars like Iraq and Afganistan although large in human suffering are not large enough to move the needle in the scale of global economies. So I think that things will just muddle thru economically for quite a while.