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CD rates are low because banks don't really need your cash. Banks don't need your cash because of low interest rates being set by the Fed.
The Fed working against millions of seniors and others who had expected to survive off their savings to make sure that the big banks and Wall Street can continue to make record profits.
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well this is precisely the point
the fed keeps interest rates low because of real estate. the u.s. baby boomers cannot withstand a correction in housing prices, and still maintain the standard of living they expect regarding retirement. Keeping rates this low prevents real estate prices from collapsing.
I paid 9.9% in the 1980's for my first house. Things were not hunky dory then either. Housing is an excuse.
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because the boomers are the most powerful generational bloc, they get what they want.
also ... wall street's interests intersect with the boomers'. they have a lot of money tied up in mortgage-backed securities and the trading of them. Housing and land takes up an unnaturally large share of our economy.
Boomers are retired in large part. They have had to go back to work because of non existent interest rates.
They pick those that do and Bernanke's failed record was well known.
Agreed. I voted for OBushMa in 2008 but realized he was yet another puppet when he re-appointed Bush's pick for Federal Reserve Chairman (after the crash that Bernanke so thoroughly failed to forsee).
So the article makes sense but can someone here please explain why Feds interest Rates for CD's (log term) are so abysmally low?????
In a lousy economy, why is the FED opting to discourage savings?...
Risk intolerance
Justin Krane, president of Krane Financial Solutions, a financial planning firm in Los Angeles, also has some suggestions for investors who are fed up with low long-term CD rates, yet can't tolerate any risk.
Track rate indicators. Short-term CD rates depend largely on how the Federal Reserve manages the benchmark federal funds rate, which is expected to be kept low though late 2014. On the other hand, long-term CD rates are more about inflation, including both the current pace and the future outlook or expectations. The bond market and 10-year Treasuries can be good indicators of inflation trends, Krane says.
Watch out for risk. Some investors abandon CDs and instead buy dividend-paying stocks, preferred stocks, preferred-stock funds, junk bond funds, emerging-market bond funds or floating-rate bond funds to chase higher yields. But Krane points out that those investments aren't apples-to-apples substitutes for CDs due to their higher risk profiles.
"If you're going to buy a CD, buy a CD," he says. "If you want exposure to the stock market, buy the stock market."
Its easy, the Federal reserve is keeping rates artificially low. Interest should be a lot higher,and as QE ends so to interest will rise. That is why good news makes the market go down today.
Its easy, the Federal reserve is keeping rates artificially low. Interest should be a lot higher,and as QE ends so to interest will rise. That is why good news makes the market go down today.
Exactly, it just goes to show how disconnected Wall Street is with reality.
The markets surge with bad news, because that means The Fed will continue pumping the stock market with their free money scheme to the tune of $85 Billion per Month.
They more available money the less needed to pay back the loan.
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