FED TO SAVERS: DROP DEAD

August 25, 2010 05:37


What this tells me is that our economic policy-makers in Washington don’t give a damn about savers. The Federal Reserve is holding short-term interest rates to near zero in a monetary policy that could be reduced to a headline like one that became famous back in the 1970s: FED TO SAVERS: DROP DEAD.

By James P. Gannon at American Spectator

“A few days ago I received my monthly statement from Fidelity Investments, where I keep some of my retirement savings. It told me that the cash I keep in a money market account there is earning an annual rate of interest of 0.01%. Yes, that is one one-hundredth of one percent.

I have enough cash in that account to buy a fancy new car or take a glorious long vacation but it earned me the grand sum of 43 cents in interest in the month of July. I might as well have the cash buried in a coffee can in my back yard.

What this tells me is that our economic policy-makers in Washington don’t give a damn about savers. The Federal Reserve is holding short-term interest rates to near zero in a monetary policy that could be reduced to a headline like one that became famous back in the 1970s: FED TO SAVERS: DROP DEAD.

The Fed’s policy is geared to making unlimited amounts of money available to banks and other lenders at almost no cost, to encourage lending and to swell bank profits. It is doing a marvelous job swelling big-bank profits and a lousy job of increasing bank lending — both because banks are still leery of taking on too much risk and because borrowers such as small business are scared to death that the economy is about to swoon again.”

FULL STORY



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