Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The Fed has brought interest rates down to artificially low rates. Inflation has been artificially reported as 3% or less over the past several years yet the real rate of inflation is most likely closer to 5 or 6%. We'll never know because the CPI has been manipulated and does not properly reflect some of the very REAL costs affecting most Americans budgets ie., food, energy, health care, and college tuitions.
Even with a 3% inflation rate the average savings account should be yielding 5%. 3% inflation + 2% risk premium. Less liquid instruments should be building off of those rates (lets not forget about the negative growth rates of the US dollar too).
At the current 1% yield it takes approx 70 years for the principal to double.
5% approx. 14 years.
7% approx. 10 years.
10% approx. 7 years.
20% approx. 3.5 years.
If you look at these rates as an inverse relationship of your money to inflation at 5% inflation your $1 today will only be worth $0.50.
The general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power.
The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that foreign currency.
Sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short.
Interest rates, wages and prices are linked to a price index and the cumulative inflation rate over three years approaches, or exceeds, 100%.
Many once great countries have fallen into hyperinflation, not just third world countries. Germany, Greece, Hungary, Chile, Mexico, Argentina, Peru, Brazil.
Price controls are useless because while the government can attempt to force people to accept a faulty currency, it cannot watch people 24x7 from seeking alternatives like bartering and exchanging gold/silver/foreign currencies for goods and black markets thrive under these conditions. France tried to execute individuals not accepting their money, and hyperinflation ensued nonetheless.
The Fed stopped producing M3 since 2006 and private sources estimate 20%+ raw money growth annually.
Even with a 3% inflation rate the average savings account should be yielding 5%.
Tell me about it. As a saver whose income is almost 100% interest, I've been railing against being made an economic sacrificial lamb by the Fed for months now. I feel like the proverbial fish in a barrel, with Bernanke hovering overhead with a shotgun at least once a month!
You know, the Congress, ultimately, is responsible for the Fed and for monetary policy, and there are even monetary policy sub-committees in the Congress.
I know it's hard, but maybe we could try to be responsible, find out who the candidates are in each one's own district and learn of their views, if any, on monetary policy, and make the effort to try to shape these views.
It may or may not have an influence on the outcome, but at least we can say we tried.
Where is the public outrage for what is happening? The Goverment has been lying thru it's teeth thruout this whole thing. They continue to bail out the bankers and stick the bill on the taxpayers, their children, and their grandchildren. The corporate owned media continues to obscure the real issues and regergitate the "party line". Is the common man really so stupid, that he can not see the end game? I don't get it, is everyone in denial or on prozac? Are they incapable of doing the math? Have the ethics and morality sunk to the level that they are willing to tollerate the coruption so long as they get something out of the deal?
Where is the public outrage for what is happening? The Goverment has been lying thru it's teeth thruout this whole thing. They continue to bail out the bankers and stick the bill on the taxpayers, their children, and their grandchildren. The corporate owned media continues to obscure the real issues and regergitate the "party line". Is the common man really so stupid, that he can not see the end game? I don't get it, is everyone in denial or on prozac? Are they incapable of doing the math? Have the ethics and morality sunk to the level that they are willing to tollerate the coruption so long as they get something out of the deal?
I could be wrong, but I think they are bailing out Bear Stearns because if they let Bear Stearns collapse, they're afraid it will start a domino effect of investment companies and banks collapsing when people panic and try to pull out all their investments at once because they're worried their own money will be effect. That's what I got out of listening to a portion of this morning's televised speech/hearing/whatever it was.
Now, maybe you don't think that would effect you...but think back to the Great Depression. The one started by the collapse of lots of financial institutions and the stock market starting in the late 20s. That affected everyone...USA...and worldwide, I believe.
The only investments I have outside my regular account (savings/checking) at my credit union are thru my 401(k) in Mutual Funds. I'm assuming I would be affected, if only via my retirement 401(k) savings. That part I could ride out...I'm not retired yet so I would be okay, but anyone already retired or coming into retirement in the next 5 to 11 years would be ruined. It might, though, effect my mortgage company and all my savings in my credit union. That's if it became bad enough.
I don't know if Bear Stearns collapse could do something like that, I haven't felt any panic myself. Hopefully someone will correct me if I misunderstood and explain why the government is so worried.
Great Post. When the government is worried should we be worried. Are our FDIC insured accounts really insured? It seems like everything "begs the question".
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
As a saver whose income is almost 100% interest, I've been railing against being made an economic sacrificial lamb by the Fed for months now. I feel like the proverbial fish in a barrel, with Bernanke hovering overhead with a shotgun at least once a month!
