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0.2% Interest? You Bet We’ll Complain (Near 0 interest rates subsidize banks, punish savers)
New York Times ^ | 03/05/2012 | Gretchen Morgenson

Posted on 03/05/2012 5:50:54 AM PST by SeekAndFind

STOP your bellyaching.

That was the message delivered last Thursday to Americans who today make almost nothing on the savings in their bank accounts.

It came from Sarah Bloom Raskin, an insider at the Federal Reserve. Ms. Raskin, one of the governors on the Fed board, made the usual disclaimer that her comments reflected her own thinking. But Fed watchers said her remarks probably mirrored views inside the central bank.

The issue — as anyone looking for income-producing investments knows — is that the Fed drove down interest rates to almost zero to shore up big banks and an economy that those banks helped drive off a cliff. Now savers, who did nothing to create the financial crisis, are being punished.

This is one of the more troubling paradoxes of the Fed’s rescue of the financial system. And, according to Ms. Raskin, it is likely to continue for some time.

So suck it up, America: If it’s good for the financial system, it’s good for you.

Yes, Ms. Raskin, who delivered her message during a speech in Westport, Conn., nodded at how low rates put pressure on savers. But she quickly extolled the advantages that rock-bottom rates offer to ordinary Americans.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: banks; federalreserve; feds; interestrates

1 posted on 03/05/2012 5:51:02 AM PST by SeekAndFind
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To: SeekAndFind
For the last 18 months or so the banks have been giving almost no return on their saving and checking accounts and the short term CDs were even worse.
Those living primarily on their savings, mainly the elderly, are in deep trouble; of course almost no mention on the ABCCbSNBCNN channels
2 posted on 03/05/2012 6:01:32 AM PST by BilLies (Save your money until after the Presidential election.)
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To: BilLies
Gretchen Morgenson is certainly out of the mold for a NY Times reporter. Wonder when she will be moving on.
3 posted on 03/05/2012 6:06:14 AM PST by BilLies (Save your money until after the Presidential election.)
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To: SeekAndFind

I guess savers are not ordinary Americans, they must be evil and punished.


4 posted on 03/05/2012 6:09:50 AM PST by evaporation-plus
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To: SeekAndFind

I guess savers are not “ordinary Americans”, they must be evil and punished.


5 posted on 03/05/2012 6:11:00 AM PST by evaporation-plus
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To: SeekAndFind

I get 10% of a penny on my CD’s.

Government agencies are telling their employees to save their money in 401ks so they can retire. Boy: Is that a joke.

Every day I watch advertisements for Reverse mortgages on homes. The homes of people who retired on their savings interest income and have had the principle eaten so they could survive.

These are ordinary people too.People forced to work at McDonalds and as Walmart greeters to eat.

Meanwhile the cost of gas and heating fuel is soparing and state taxes are rising.

Then I read that under Obamacare the Government will have the power to go to my bank account and draw out money to pay for their crooked insurance they want to force me to buy.

They can take my money that I might need to buy food and pay their stinking assed crooked Obamacare with it.
I no longer have a choice between health insurance and eating. I will have health care , but I might not eat, and what happens when that money they steal from me is gone.

It makes me think that maybe I would be smart to start slowly taking out my funds now and burying them in the back yard. Better that than wait for the Fourth Reich to break me.


6 posted on 03/05/2012 6:16:06 AM PST by Venturer
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To: SeekAndFind

If you like real-world lessons, take out a ten thousand dollar loan for a month and put the money into a savings account at the same bank. Look at the percentage difference. Not the percentage rates of the loan and the savings account, but the amount you receive in interest from the savings account as a percentage of what you pay in interest for the loan. The banks always win.


7 posted on 03/05/2012 6:29:00 AM PST by blueunicorn6 ("A crack shot and a good dancer")
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To: BilLies

I don’t blame anyone for this. I just don’t keep any money in the bank. For me it’s bonds and PM’s.

Heck, my sister and her husband are cutting back on expenditures, and they’re worth hundreds of millions. Most of their investments are in things like municipal bonds and other tax-free and relatively risk free stuff. They’re selling one of their boats (A 115 footer with six suites), but keeping the Cesna Citation. They laid off the crew of the boat and the captain was making six figures.

When you have the money they do, you should be able to live off the income your money generates. When rates, etc. drop to the point where you are spending more than you are earning, you cut back. Which is what they are doing.

My wife and I, on our small scale, have done exactly the same thing. Restaurant visits are extremely rare now and paying off every penny of debt (including mortgage) and prepper activities is what it is all about. And we are still having a blast!

The rich are not stupid. That’s how they got rich.


8 posted on 03/05/2012 6:31:55 AM PST by cuban leaf (Were doomed! Details at eleven.)
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To: SeekAndFind

Ahhhhh, the unintended consequences of gubermint meddling in the economy. No return on savings = no savings (or find another place to invest)...this will hurt the banks long-term because it dries up the reserves they need to make loans. I already cashed in my CDs...it wasn’t even paying enough to offset the risk of bank failure.


9 posted on 03/05/2012 6:34:50 AM PST by Mich Patriot (I am not worried about the deficit. It is big enough to take care of itself. Ronald Reagan)
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To: blueunicorn6

Of course they always win. They’re in the business of buying money wholesale and reselling it at retail. Leaving loss leaders aside, do you no expect your local grocery store to charge more for cantaloupes than they paid for them?


10 posted on 03/05/2012 6:37:16 AM PST by 2 Kool 2 Be 4-Gotten
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To: SeekAndFind

Best rate out there I have found is INGdirect.
It pays a measly .08, but that is better than the other banks.
Never thought I would recommend a bank paying .08 on savings accounts.


11 posted on 03/05/2012 6:42:32 AM PST by 9422WMR (Life is not fair, just deal with it.)
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To: BilLies
Kyle Bass from Hayman Capital talked about the Zero Interest Rate trap in his letter to investors entitled "The Cognitive Dissonance of It All."

Salient Capital in Houston has a very concise 3Q Macroeconomic Report that also discusses the wealth elimination taking place under ZIRP.

Long wave contraction, Baby. Long wave contraction!

12 posted on 03/05/2012 6:44:31 AM PST by TheWriterTX (All in now for Newt Gingrich)
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To: 9422WMR

RE: Best rate out there I have found is INGdirect.

What about Capital One, which boasts interest at 5 times national average? (What’s in your wallet?)


13 posted on 03/05/2012 6:48:31 AM PST by SeekAndFind (question)
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To: BilLies
"Gretchen Morgenson is certainly out of the mold for a NY Times reporter. Wonder when she will be moving on."

The NYTimes and the WSJ editorial pages are 180 degrees apart on "global warming", but if you took a half-dozen random articles from each on the *business reporting* side of any "energy" issue, without the bylines you would be hard pressed to guess which came from which publication.

Lots of media-aware libs *hate* the WSJ editorial pages, but readily admit that the *business* reporting is probably the best of any US daily.

Gretchen Morgenson, Floyd Norris and Joe Nocera - all business reporters who are also occasional NYTimes editorial contributors - are three of the best business *reporters* at any US daily, and have a long history of writing articles which do not adhere to the "party line."

If you want your business coverage to be taken seriously, that's the sort of staff you have to have.

IMO even from an "editorial" standpoint, if you just read just one or the other you are going to be missing a lot of information that's valuable for personal and business planning - if only because the economic environment is created in part by the "message" from both camps.

For that matter, if you read only the US media you are missing a lot of perspective, even a "center-right" publication such as the Financial Times covers a lot of material that receives poor coverage here, or covers it from a wider range of perspectives; many FT commentators are a *lot* more cynical about both government and business than their US counterparts, which IMO is a good thing.

14 posted on 03/05/2012 6:53:14 AM PST by M. Dodge Thomas
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To: blueunicorn6
"If you like real-world lessons, take out a ten thousand dollar loan for a month and put the money into a savings account at the same bank. Look at the percentage difference. Not the percentage rates of the loan and the savings account, but the amount you receive in interest from the savings account as a percentage of what you pay in interest for the loan. The banks always win."

Well, that's pretty much the current plan: you allow the banks to arbitrage off the difference between .04% cost and 24.25% interest on consumer credit cards.

The people who get hit first are the unemployed who are living off CCs, longer term it's anyone who derives substantial portions of their income from interest paid on readily accessible low-risk "investments".

The result is a huge and accelerating shift in wealth-holding patterns - the difference is that increasingly larger numbers of people realize that the problem is *both* "business" and "government", that as far as the FIRE sector is concerned, we are effectively living under conditions of "State-Capitalism".

15 posted on 03/05/2012 7:11:51 AM PST by M. Dodge Thomas
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To: SeekAndFind

This is a TAX on savers—plain and simple. Why? So the Government can borrow at close to zero interest rate. It basically keeps the cost of Federal interest payments down so the goodies (entitlements) can keep on flowing.

In addition, real inflation is probably closer to 10%—another hidden tax.


16 posted on 03/05/2012 7:24:10 AM PST by rbg81 (Only taxpayers should be allowed to vote)
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To: SeekAndFind

Capitol one is a credit card that pays you back a % of your annual purchases. Not a savings account, as far as I am aware....


17 posted on 03/05/2012 7:27:20 AM PST by 9422WMR (Life is not fair, just deal with it.)
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To: SeekAndFind

I should also add that this isn’t going to end anytime soon. In fact, wouldn’t be surprised if (in ten years) you have to PAY for the priviledge of keeping your $$ in a bank. Why? Basically, they’re offering a wealth preservation service. Because, by that time, everything else will be a losing proposition.


18 posted on 03/05/2012 7:29:17 AM PST by rbg81 (Only taxpayers should be allowed to vote)
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To: 9422WMR

Oops, here are their rates:
Capitol One Bank
Interest Plus Online Savings 0.65%† Calculator
Interest Online Checking 0.60%
Rewards Money Market 0.40%
†Balance at least $1,000

Still less than what ING pays on SAVINGS accounts..80%


19 posted on 03/05/2012 7:33:07 AM PST by 9422WMR (Life is not fair, just deal with it.)
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To: BilLies; Graybeard58
For the last 18 months or so

It's been a helluva lot longer than that; I quit working 10 years ago and could have eked by on the 8% my money market was paying....that rate evaporated within a year.

So I did what millions of others have done - put 'pressure on the system' and went on the Social Security tit at the very first opportunity, instead of waiting until age 66 or 67.

20 posted on 03/05/2012 7:34:28 AM PST by ErnBatavia (Carterize Obama in November)
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To: 2 Kool 2 Be 4-Gotten

Yes. And I’m still waiting for Obama to bail me out.


21 posted on 03/05/2012 7:48:59 AM PST by blueunicorn6 ("A crack shot and a good dancer")
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To: cuban leaf
I don’t blame anyone for this.

Well, you should. Because the culprit is easily identifiable. The Federal Reserve has stuffed the banks so full of newly-printed reserves, they no longer really need savings deposits.

It's fine and dandy to cut back on spending, but you really should pay attention to the reasons for it.

22 posted on 03/05/2012 8:13:45 AM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: Mich Patriot
this will hurt the banks long-term because it dries up the reserves they need to make loans.

There are other ways to build capital, but in the O-conomy it is a very slow and laborious process.

Paying higher rates on savings hurts financial institutions through them having to pay for a higher cost of funds. That's why you will find savings on the debit side of a financial institution's ledger, not the asset side.

23 posted on 03/05/2012 8:18:19 AM PST by Colonel_Flagg (Why, yes. I AM in a bad mood.)
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To: BfloGuy

I should be clear: I now consider it a waste of time to place blame. The time for that will come after the collapse. Right now I am in the same mindset as a Jew trying to get a boat ticket out of Germany to England in the mid-1930’s. My opinion and actions are not going to change the minds of anyone with political power. They know what they are going to do with or without me.

So my focus is on the things I can change. Specifially, that is mitigating risks to the survival of my family, spiritually and physically. And in that order. I view the current political/financial situation for the US and the entire civilized world through this lens,and act accordingly:

God, give us grace to accept with serenity
the things that cannot be changed,
Courage to change the things
which should be changed,
and the Wisdom to distinguish
the one from the other.

Living one day at a time,
Enjoying one moment at a time,
Accepting hardship as a pathway to peace,
Taking, as Jesus did,
This sinful world as it is,
Not as I would have it,
Trusting that You will make all things right,
If I surrender to Your will,
So that I may be reasonably happy in this life,
And supremely happy with You forever in the next.

Amen.


24 posted on 03/05/2012 8:25:22 AM PST by cuban leaf (Were doomed! Details at eleven.)
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To: 9422WMR
Best rate out there I have found is INGdirect. It pays a measly .08, but that is better than the other banks.

Never thought I would recommend a bank paying .08 on savings accounts.

.08 without a qualifier means 8%. Is that what you mean?

25 posted on 03/05/2012 8:26:46 AM PST by Graybeard58 (Eccl 10 v. 19 A feast is made for laughter, and wine maketh merry: but money answereth all things.)
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To: BfloGuy

I forgot to mention that I agree with you regarding the Fed. It’s why I’m all over junk silver. I mean, ALL over it.


26 posted on 03/05/2012 8:31:04 AM PST by cuban leaf (Were doomed! Details at eleven.)
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To: Graybeard58

No, it is eight tenths of one percent.
.8 percent


27 posted on 03/05/2012 8:37:10 AM PST by 9422WMR (Life is not fair, just deal with it.)
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To: ErnBatavia

“So I did what millions of others have done - put ‘pressure on the system’ and went on the Social Security tit at the very first opportunity, instead of waiting until age 66 or 67.”

Same here. Couldn’t see waiting another 5-6 years to let the Fed government hold my money and decrease the time I have to spend what is left. I know I’m alive today, I can’t say the same thing 5-6 years from now.


28 posted on 03/05/2012 8:48:16 AM PST by WILLIALAL
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To: cuban leaf

“It’s why I’m all over junk silver. I mean, ALL over it.”

I was doing that, until the price jumped way beyond reason about 18 months ago. I was hoping there would be a strong pull back, so that I could stock up on more.

Just wish I had bought much more when it was in the mid teens.


29 posted on 03/05/2012 8:56:00 AM PST by WILLIALAL
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To: WILLIALAL

We’re in similar positions. I have not bought any for a while now. The last was a batch of silver eagle proofs for $40 each. I’m spending on the other investment now: Garden, farm buildings, etc.


30 posted on 03/05/2012 9:04:28 AM PST by cuban leaf (Were doomed! Details at eleven.)
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To: cuban leaf
I now consider it a waste of time to place blame

Fair enough. You're probably right.

31 posted on 03/05/2012 1:53:22 PM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: 9422WMR

Discover Bank: 0.85%.


32 posted on 03/05/2012 2:01:01 PM PST by tnlibertarian (Selfishly stealing other people's witticisms for taglines since 2002.)
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To: cuban leaf
beautiful...just beautiful....

but one thing.....we have no England to escape to.....

33 posted on 03/05/2012 8:55:45 PM PST by cherry
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To: cherry

—but one thing.....we have no England to escape to.....—

True. I escaped to a farm in central Kentucky. It’s the best I could do. Just getting out from under the thumb of Seattle’s King county was a true blessing. Also, in Revelation 18:4, we are told to get out of Babylon, which is not a particular country. It is, in my opinion, western culture as we know it - or at least what it has become. So, in a way, I got out by leaving a blue county and moving to a VERY red area. I got out of “spiritual” babylon.

Right now it is the closest thing to heaven on earth I’ve ever experienced, despite driving by a large building this last week on my way to work that is simply gone, thanks to a tornado.

But I believe it will get tough, for everyone, but less for those who are farthest from the urban centers. I believe it so strongly that I bought this farm and home two weeks before Obama’s election - and I honestly thought McCain would win. We moved permanently last August and are becoming full blown preppers.


34 posted on 03/06/2012 5:10:47 AM PST by cuban leaf (Were doomed! Details at eleven.)
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