[wfn]

Here's a nice related FT opinion article, "The rich get richer and rates get lower": https://archive.is/rMTnV

It explains a sort of feedback loop taking place here (with regards to excess of money looking where to invest => "This pushes rates down directly, when those savings are invested, driving asset prices up and yields down; and indirectly, by sapping aggregate demand.")

[imtringued]

The article doesn't explain why those savings aren't used for investments and why yields on investments are going down.

Quite frankly, it's because population growth is slowing down. Children used to be an exponentially growing consumer market.

[wfn]

Hm, but the idea (in the article as well) is that savings _are_ being used for investments and overwhelmingly so; and because of this, investment returns are going down. Does this part need further justifying? If you have a finite amount of assets and instruments where money can be invested and you have more money being invested into them, you'll have lower returns in the end. Why this is in particular I guess depends on the asset class in question - e.g. as more money goes into index funds, the prices (of shares and therefore their indices) will rise, therefore lowering overall dividend yields (relative to share price). RE prices will rise, etc.:

"Atif Mian, Ludwig Straub and Amir Sufi agree with partisans of the demographic view, such as the economists Charles Goodhart and Manoj Pradhan (whose view I have spent fair amount of space on here), that a key contributor to falling rates is higher savings. Savings chase returns, so when there are more savings and the same number of places to put them, rates of return must fall.

Mian, Straub and Sufi disagree, however, about why there are ever more savings sloshing around. It is not because the huge baby-boom generation is getting older and saving more (a trend that will change direction soon, when they are all retired). Rather, it’s because a larger and larger slice of national income is going to the top decile of earners. Because a person can only consume so much, the wealthy few tend to save much of this income rather than spend it. This pushes rates down directly, when those savings are invested, driving asset prices up and yields down; and indirectly, by sapping aggregate demand."

> Quite frankly, it's because population growth is slowing down.

I thought the article dispelled this particular myth in particular, but maybe I'm wrong?