Skip to comments.If You're A Saver, Ben Bernanke Has A Special Message For You
Posted on 09/14/2012 3:51:58 AM PDT by SoFloFreeper
One of the most powerful moments of Ben Bernanke's press conference yesterday, after the Fed announced Unlimited QE, was when he refuted some myths about Fed action before he started the Q&A.
In particular, he took on the idea that the Fed was screwing savers because rates are so low, and you can't get any return holding money in the bank.
Here's what he said:
On the second concern, my colleagues and I are very much aware that holders of interest- bearing assets, such as certificates of deposit, are receiving very low returns. But low interest rates also support the value of many other assets that Americans own, such as homes and businesses large and small. Indeed, in general, healthy investment returns cannot be sustained in a weak economy, and of course it is difficult to save for retirement or other goals without the income from a job. Thus, while low interest rates do impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates help promote.
So in other words: The main thing is that you can't save if you don't have a job, and that's what the Fed is trying to address. Furthermore, there are lots of kinds of assets that do benefit from low rates.
When the economy returns to health, savers will be able to get paid, just like everyone else. But until then, there's no special right to earn income on having money in a bank.
(Excerpt) Read more at businessinsider.com ...
It is pure debasement of the currency, plain and simple. Historically, it rarely ends well.
My hat is off to our Canadian neighbors. They are reaping the benefits of sane economic and energy policy.
They are trying to bring America to its knees while the sheeple are sleeping.
I had a grandma who kept her money beneath a floorboard under her bed. Maybe I should do the same.
There are no rewards for people who work hard and save their money. They are all saps.
Weimar Germany DELIBERATELY devalued their own currency.
Why? To get out of paying war reparations.
What’s “O’s” excuse? Something JUST as incidious, you can bet!
‘Manufactured crisis’ comes to mind. I just KNOW there is something very irregular, illicit and deliberate which is going to be forced by this Administration.
The only way the government will be able to pay for Social Security will be to inflate it away.
Unfortunately, that is taking away the money we saved to compensate for the loss of SS.
Message to savers: “FU”.
There were decades when S&Ls paid 4% on passbook savings and loaned the money out on houses at 6% ... and it worked just fine.
Oh, you can still get a return on savings... just don’t save in the form of cash. Saving in the form of tradable metals is perfectly viable.
Exactly. Savings not only are suffering from low interest, their true VALUE is going down, as the dollar is de-valued.
This is all in furtherance of Global Governance, where we will LOSE the Dollar as the Global Currency, and we can then take bushels of them to go and buy bread.
Unless we IMMEDIATELY return to Free Market Government Hands-Off, we are not turning back.
Personal savings are being STOLEN BY THE STATE!
When asked if this was political, his eyes started blinking fast and he looked down and to the left. Classic tells.
There was a time in this country that was a capital offense.
Paying off a 30-year fixed rate mortgage at an interest rate around 4.5% is great for the borrower, but the lender is going to take a huge bath on this if: (1) interest rates rise; and/or (2) the effective currency inflation rate is higher than 4.5%.
They CAN’T raise rates!
It would totally implode the economy!
To the extent that our economy “works”, it does so because people spend. Each and every year, we hang our hat on the Christmas season. The entire health of the economy judged by people spending money they don’t have on stuff they don’t need. When that’s your barometer, you’re screwed. Saving is for the manufacturing powerhouses, not the U.S.
The lenders are not going to take any hit unless they hold the mortgages. No, they will discount them back to the government....just like before the 2008 disaster.
The people who will killed beyond belief are the dopes who buy any of this worthless paper which will be repackaged into FHA bonds. Of course when they cannot sell them to the public including mostly businesses like insurance companies, who will buy them...ahem, here comes Ben the Bandit who will gladly put them on the fed balance sheet. Meanwhile, the cycle continues, spins faster until the end is reached in one super nova of devaluation and inflation.
Remember to load up on the three most valuable metals: Gold, silver and lead.
———They are trying to bring America to its knees——
No, the actions are to devalue the debt. Compounded over time, the inflation (debasement) rate will reduce the debt in future dollars. A constant rate of 7% inflation compounded will halve the debt in about 10 years.
-——Personal savings are being STOLEN BY THE STATE! ——
Savings defined as cash will decline in value.
Savings invested in hard assets will increase in value as prices are inflated. Investing in a diversified Mutual Fund of the best of American corporations will preserve the value, ditto gold/silver, land, realestate
For years now, savers have been forced to contribute to the bailout of all the financially destructive policies implemented by politicians, the Fed and some Wall Street types. And there is no end in sight.
I should be more clear. When I use the term “lenders” I don’t just mean the banks themselves ... I mean anyone who buys the mortgage-backed securities that are comprised of those loans.
If interest rates went up to a reasonable level, it would add many tens of billions to our already trillion dollar plus federal budget deficits. That's the main thing Bernanke is fighting.
They talk a great deal about "pool". Do you take possession, or use this "pool"? My initial reading on this "pool" mechanism is that it negates the whole rationale for buying metals...
It will not work.
The nominal value of the paper equities that would explode if interest rates go up VASTLY exceed the Federal debt.
Read my short essay...
Ben is covering for the 2 Big 2 Fails!
Going to be? LOL!
Best hedge is dog food futures because that’s all Florida seniors are going to be eating.
November 6, 2012: a day of reckoning
Punishing savers for not 'investing' in the economy is standard. Dont forget to give Obama credit for the stock market as those libs on MSNBC are doing
Alternatively if the two parties were to really let all those tax cuts expire and all those spending cuts to go into effect, at the same time, the result would be a huge slowdown in the economy and market dive, at least in the near term. Long term (in years) it could actually be good to have the deficit reduction, but few really care about that.
Pity the party in the WH if that happens, although it would be Obama’s second term so he would NOT be at risk asa Romney POTUS would, Romney would just make a deal if he thinks he will get blamed.
If interest rates rose to a reasonable level, then all the new federal debt and all the refinanced old federal debt would become much more expensive. The interest on the debt would become so expensive that the government could longer sell new debt (except to the fed), the government’s credit rating would become such that they could not continue to function and support all those who receive payments from the government.
The scenario you’ve heard about and accepted is theoretical, but if the government stops meeting its obligations in this dependency society, we’d have a sort of anarchy will the tens of millions of people with no means of support.
I’ve heard other financial high flyers make different predictions about what might happen in your derivatives scenario, and several who admit they don’t know what would happen.
Over at Zerohedge, one of the writers had this summation of his essay: “The Fed continues to follow the same wrong policies as it has since the beginning of this depression. We now have one of the longest depressions in history that has been caused by the Fed and the fiscal policies of the Bush and Obama Administrations. They are devaluing the dollar, destroying capital, thwarting growth, and cheating savers out of their hard earned money. It is a cruel blow to the 23.1 million un/under-employed in the U.S. who need economic growth to create jobs.”
I could not make a better statement about how out of touch these jerks in DC are especially the part of how they are cheating savers out of their hard earned money...frankly, they are stealing it.
Well, if there was an interest rate hike, enough to trigger even a small fraction of the 340 Trillion in notational value of interest rate swaps, that would decimate 9 out of 10 of the large brokerage firms in the country, and probably five out of five of the biggest banks.
They wrote contracts and they don’t have what it would take to deliver.
Just like the silver short position.
They ain’t got it.
If the Fed, knowing this, can’t raise interest rates, they have no way of attracting foreign investors.
So they are stuck. QE3, QE4, QE5, QE to in-fin-it-eee..
You gotta symbol?
” - - - He is punishing saving...trying to force people to spend or put money in equities. “
In other words, The Fed is trying to replace Private Capital Investment, otherwise known as Capitalism.
BTW, isn’t Bernanke a University Professor who has never worked a day in his life earning a living in Private Capital Businesses? Well, except for being paid for mowing his parent’s lawn.
BTW, BTW, a suggested new Bernanke policy slogan: “Spending will continue until we are out of debt!”
(Hmmmmmmm, - - - - if that is good enough for The Federal Reserve, then it is good enough for every hard-working American Family too)!
-——to trigger even a small fraction of the 340 Trillion in notational value of interest rate swaps, -—
That sentence is beyond my capacity. What is notational value of interest rate swaps?
We learn by asking
Except that by definition, retirees - the savers - will be dead and will not benefit from these ULTIMATE benefits.
To be fair, this decline has been going on.through Republican and Democrats. It's just accelerated during the Obama regime.
A related article that deserves a thread of its’ own. Sadly I don’t know how.....http://www.bloomberg.com/news/2012-09-12/about-those-policies-that-got-us-into-this-mess-caroline-baum.html
As far as I understand it, the notational amount is the total amount of debt covered by interest rate swap protection.
So if it was all covered at a time when say the prime rate was five percent, and the prime went to seven percent, somebody would be on the hook for 2 percent times 340 trillion.
Personally, I think they found a way to leverage it even farther than that...
Why? So it can become more worthless by the hour?
Food, Spices, An apparatus that can purify water, Ammo, Weapons (At least a 12 ga. a Kabar knife and a 22 rifle for each family member.) First aide supplies, Junk Silver.
All of the above is going to go up in price so buying now is the same thing as investing. And, it may save your life if the SHTF!
Indeed, commodities are what you should put your savings in.
You’ll need SOME cash in hand for a while, even if it’s worth 50-80% of what it was yesterday, it’s still not 0.
I’m seriously looking at taking out some IRA money, taking the hit, and converting it to silver.
>>Manufactured crisis comes to mind.
Another Ba’al-Out for NyLon Suuuuper Genius gold buggers.
More and more, I’m thinking of a type of item that would be priceless if SHTF...
Think about it. We wash our clothes with soap. We wash our pitts with soap. Our dishes, our sheets... and we don’t think much about it, because now it’s everywhere.
Think how much it would be worth if it was almost nowhere, not everywhere!
And think about it.
If what I said about what “notational” means is correct, then we are talking 340 trillion dollars.
Annual GDP is like what, 15 trillion dollars?
And we are in hoc for (at least what we KNOW of) 340 trillion dollars?
It’s unsustainable. It’s to the point of being meaningless.
It can’t be leveraged against. It can’t be insured. It can’t be paid back.
It’s totally un-regulatable and if you put five people in a room and ask them what it means, you will get six or seven different answers!
The primary competing interest to higher interest rates is the national debt. It is far easier to pay on a debt with 0% interest. If interest rates were to go to 4% on the debt the fed would default.
We already pay $250 billion in interest each year on the debt with notes near 1.5% on average. Imagine the debt at 4%, the interest payment would be $640 billion. At 7% the debt interest would be $1.12 trillion.
We are broke. The older generations have borrowed/stolen from their children, grand children, and many generations past that.
“Annual GDP is like what, 15 trillion dollars?”
Far less than $10 trillion. The fed likes to count money twice and counts service industries as some kind of product.