My expectation that nothing of interest would happen at the Federal Reserve’s Jackson Hole conference turned out to be wrong. Fed chair Jay Powell’s speech was boring, sure, but three academics redeemed the proceedings by presenting a paper investors would do well to read. 

They argue that the primary force driving down interest rates is not demographic change, but income inequality. This is important for investors, because the demographic trend that has (in theory) put pressure on rates is set to reverse, while the trend towards greater income inequality looks like it’s locked in place. 

Atif Mian, Ludwig Straub and Amir Sufi agree with partisans of the demographic view, such as the economists Charles Goodhart and Manoj Pradhan, 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.