Thoughts while pondering the 43 cents of interest I earned on my savings.
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.
The current Fed policy fits nicely with the Obama Administration's aim to increase spending (both consumer and Congressional) of all kinds -- a policy which discourages any kind of saving and applauds any kind of spending.
Even though overspending and easy lending led to a housing bubble whose implosion triggered the 2008 financial crisis and the resulting Great Depression, the Fed and the Administration are desperately trying to pump up the real estate market with cheap money and government guarantees on 90% of the mortgage loans made in the U.S. today. Mortgage rates are at or near historic lows, and housing prices are at their most affordable level in years.
Yet none of this is working to revive the economy. Housing is sinking again; in July, existing home sales fell 27%, far more than expected. New unemployment claims are rising again, to nearly 500,000 a week, putting upward pressure on the nation's 9.5% jobless rate, and the stock market is signaling a strong chance of a double-dip recession.
So the reward for all this brilliant policy making by the Fed and the White House goes mainly to big banks and large multinational corporations, whose profits are rising smartly. The big-money interests are doing well, while about 17 percent of the nation's working people are either unemployed or under-employed, and while retirees trying to live on their savings are seeing their incomes decline and the value of their investments shrink.
Obama's big-spending stimulus plans clearly have failed to revive the economy, and the Fed's policy of printing money and virtually giving it away have rewarded the wrong people and left responsible folks -- those who work, pay taxes, restrain their spending and put away some savings -- feeling like suckers being conned in a political shell game.
Obama postures as the champion of ordinary people and the bane of the "rich" but the outcomes of his policies suggest the opposite is true. Under these policies, working people are suffering, retirees living on fixed incomes are being punished, small businesses are struggling to hang on, while big banks and corporations are making out just fine.
The nation can little afford to maintain the Obama-Bernanke economic policies of rising deficits, ballooning national debt, unlimited money-printing, high unemployment and no reward for saving or investing. It will end in something worse than the 2008 collapse, unless Americans wake up in November and say: "Enough!"
Only a two-by-four to the head of the Democratic Party's donkey will get their attention. It's beginning to look like the voters are reaching for the lumber.
Letter to the Editor
James P. Gannon is a retired former Wall Street Journal reporter and newspaper editor. He lives in Virginia.
Ah, friend Gannon, like so many Americans you still don't get it. A brutal class war is already underway and gathering steam and there you sit, carping about a symptom instead of the disease.
In this corner, ladies and gentlemen, in the blue trunks, Team Left: welfare hacks, teachers, public union thugs, and corrupt banksters.
And in this corner, in the red trunks with both hands tied behind his back, Team Right: savers, private sector employees, small businessmen.
The fight is anything but fair; the object is to strip and transfer ALL the wealth from Team Right to Team Left; anything goes for Team Left but Team Right is literally tied down for the beating....
Ding-ding!!! We're already in the third round, Mr. Gannon, anf Team Right is taking an awful beating.......Where's Lou Duva and the Fight Doctor?
Problem for the 'blue trunks': Since only the 'red trunks' make real products and real profits, both sides have to live off of the red trunks production. Since the red trunks cannot make enough to support the ever increasing demands of the blues, the blues will necessarily fight amongst themselves to get "theirs."
If the red trunks don't starve to death, they should re-emerge on top, if they'll only recognize this situation and convince the crowd outside the ring of the veritable reality of this seemingly inane allegory.
Actually, Steve's right!
Nolite me conculcare!
"Since only the 'red trunks' make real products"
So do the Chinese-- doesn't mean there is anything virtuous about China. It's all business, as Michael Corleone said.
"nothing personal, Tom"
Steve, Gannon was not writing about class warfare. Why don't you write a cogent 660 word article on class warfare? Then we can blast you for not talking about rising deficits, ballooning national debt, unlimited money-printing, high unemployment and no reward for saving or investing.
Steve, you are absolutely right, but at least here in Florida, Republican primary voters are fighting back by voting out incumbents who've done nothing to stop the lefties from destroying our economy.
Low interest rates in a sane world would mean and upsurge of small businesses taking advantage of cheap loans, but this administration has made starting a business many times riskier than it is in normal times.
November can't come soon enough.
January can't come soon enough.
What? you mean January 2021? You can't change things just like THAT.
Speaking of drop dead...JFK took on the FED when on 6/4/1963 the president signed an executive order authorizing the Treasury Department to start printing debt free US treasury notes in lieu of debt ridden/borrowed Federal Reserve notes. The amount printed coincided with the value of silver in the US vaults. It almost worked, then came 11/22/1963, subsequently all US treasury notes were removed from circulation. Maybe just maybe the new Congress can restart Kennedy's initiative and end the FED's economic grip on this country. JFK had it right constitutionally speaking and the existence of the FED is unconstitutional.
>> The Fed IS a Terrorist Organization
Low interest rates are a big problem for pension funds. Pension funds are often managed with the expectation of earning 7% on investments, but this return has proved elusive due to the stock market break and current low rates. Fed efforts to hold down interest rates necessitates more money go into pension funds so they may meet future obligations. This in turn forces states and municipalities to lay off workers.
Forcing interest rates to artificially low levels is quite harmful to the economy, but central banks fail to learn their lesson. The US central bank is following the Japanese model and will probably get the same results.
Not to worry about the union pension funds. We, tax payers, will bail them out now so that when and if the economy ever recovers they will really be fat. Did I hear you say they might pay us back? Oh, I guess I have a hearing problem because we all know they will cry poor mouth and we will eat the bill.
An Economic Status Report From Fly Over Country:
Banks are asking all small businesses to make substantial down payments on loans in order to keep them (how do you pay a loan down 15-20% when your sales are down 50-80%)
Reports from all sectors are that the 4th quarter looks anemic at best (My CPA firm who has 200+ customers is reporting none of its customers are seeing growth in the 4th quarter.)
Public projects, many fueled by stimulus money are paying 90-120 days after being invoiced..How in the world can a business supply product for a customer who says they will pay in 30 days and then pays in 100? I have three projects myself who are acting this way!
There is more but you get the picture. The great slowdown is here. Call it a depression or whatever you want. Small business has downsized all it can. American families have taken huge financial hits and are now eating up valuable seed corn. Everyone is getting out of the market for preservation. Friends of mine who have never even mentioned the word gun are considering going for training and buying a weapon to defend their family if (shudder) the worse comes to worst. We not only have to take this Republic back at the ballot box but hose who are in office will have to take the strongest action possible to give Americans a sign that we ware going to return to a smaller government, let people keep more of their own money and allow people the individual freedom to say a mosque should not be built at Ground Zero and not be accused by the President, his administration, the MSM and so called moderate Muslims that we are racists, phobes of some sort etc. Our tipping point is here. God bless.
Front Sight in Nevada is THE place to go for firearms training.
http://www.frontsight.com/
Optimistically, our return to a Constitutional Republic is what will happen.
Pessimistically, we're headed for some form of Chavez style dictatorship (if where not there already) and maybe, if we're lucky, there'll be a military coup that returns the Republic to us.
Going back to the days of Caesar, though, not too many military coups, if any, have gone from benign military dictator back to a republic or democracy ... just more benign dictatorship - if the nation's been lucky (e.g. Augustus - and he ruled only after a civil war. And then came Tiberius where it all started going down hill. And then things really heated up the corruption gauge under Calligula.).
How about this prime argument from the Left: " The Bush tax cuts destroyed the economy." That is my favorite. So let's say we have a truck driver who scraped some $$ together 20 years ago & bought his own truck, added another, picked up some routes & deliveries, hired a few guys & now has 30 drivers & a fleet & makes 500K. The American dream, the American way. Bush comes along & lowers his taxes by 4%. DISASTER for the economy that this guy keeps more of his $$ says the left. He will surely bury it in the backyard. How the hell did he get there?? Not by burying it but by re-investing in the business, hiring another guy, buying more equipment, a vacation home, a jet ski, furniture. ALL of this activity stimulating the economy, creating jobs & adding to the net total of funds collected in taxes. Multiply this times 1 million people like our truck driver & this is the economy. The suggestion that letting our hero keep 4% more of his OWN $$ ruined the economy is pathetic to anyone with an IQ over 50. I guess Chris Matthews does not qualify for over 50 as this is what I heard on his show last night. Unreal.
I saw the same thing while flipping the channel past Keith Olberman. I couldn't believe it, that they were saying how the Bush Tax Cuts helped put us in debt. Then I thought about it: yeah, of course they are denying a over bloated and over spending government extra funds to start payinbg the debt. That is like blaming someone for your overspending debt because they wouldn't give you the money to spend in the first place. Wierd how these lefties manage to figure out a way to throw the blame somewhere it is not.
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