Bob Carlson

There’s been a lot of big news from global central banks over the last month or so, but the events have one consistent effect: Traditional savers and investors are in a lot of trouble. To support global economies and offset the deleveraging in the developed world, the central banks have decided to drop any restrictions on their money creation. Since 2008, the Federal Reserve and the European Central Bank have had stop-and-go money creation policies. They’ve decided that isn’t going to be enough in the face of the growing sovereign debt crisis in Europe. The ECB made clear it no longer would have restrictions on money creation with its willingness to make three-year low interest loans to European banks backed by virtually any collateral. The Fed already announced it would facilitate loans to European banks through the ECB. On Wednesday the Fed went a step farther. It plans to keep short-term interest rates low at least through mid-2014. It’s also going to try to keep long-term rates low to make mortgages affordable and help the housing market.

The Fed’s made no secret that it plans to support the U.S. stock market. It believes increasing household wealth through higher asset prices will increase confidence and generate more economic activity. I’ll have more to save about this in future issues of Retirement Watch, especially its implications for investors. I’ll also discuss it in the free webinar coming Feb. 1 at 3:30 p.m. eastern time. Spaces are limited. To reserve your place in this free webinar, contacting TJT Capital at info@tjtcapital.com or 877-282-4609. You can review past webinars at www.tjtcapital.com.

That means U.S. investors starved for yield will have to continue their search for income by extending maturities or durations of their fixed-income holdings, or putting money in riskier, higher-yielding securities, said Dean Junkans, chief investment officer of Wells Fargo Advisors and Wells Fargo (WFC) Private Bank, which are units of Wells Fargo & Co.

“There’s not an easy answer for retirees,” said Junkans, who’s based in Minneapolis. “Don’t be lulled into the belief that buying intermediate Treasury-type products or strategies at these low, low interest levels are risk free.”