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Yes, it is, but the role of the FOMC is to buy and sell secondary market securities, thereby forcing the money supply to expand or contract. While it is hoped that these moves will influence the FFR toward the Fed's target for it, the actual rate is driven up or down by the actual lenders and borrowers who are the actors in overnight markets for reserves.
Savers in the USA get screwed (or those that actually live below their means) while spenders and people in debt make out big time.
Is this really how we want the system to work?
Within reason, yes. Any economy depends on this for growth. Of course unnecessary profligate spending on niceties alone, without plans for the future is the potential bad side.
Right now we are encouraging saving by investment vs bank savings. Good for us in general IMO.
cash instruments have been the riskiest asset class losing purchasing power 33% of the time because of negative real returns the last 45 years and losing purchasing power 40% of the time when inflation and taxes are figured.
A simple 50/50 mix has never had a losing 10 or 20 year time frame. Anyone with any financial sense would not put all their money in cash instruments.
If they do than they are in the riskiest asset class whether they know it or not .
The problem is everybody buying stuff they can't afford (and in many cases, don't *need*) *now*, with an even *bigger* bill due in the future...and that includes the government.
Its a completely retarded way to operate.
When average citizens do it, they end up living paycheck to paycheck, fretting over whether they are going to be able to pay the bills each month (and buying lottery tickets in the futile hope that they will hit the 'big one' and all their problems will be solved)***.
But when the government does it, hang on to your hats. No problem, just raise the 'debt ceiling' and wave the magic wand while mumbling "Abracadabra" in a massive game of financial alchemy. Yeah, keep spinning the freaking plates 'til they all come crashing down.
I'd like to use some stronger language to describe my opinion on the matter, but I'd rather not get banned.
The problem is everybody buying stuff they can't afford (and in many cases, don't *need*) *now*, with an even *bigger* bill due in the future...and that includes the government.
Its a completely retarded way to operate.
When average citizens do it, they end up living paycheck to paycheck, fretting over whether they are going to be able to pay the bills each month (and buying lottery tickets in the futile hope that they will hit the 'big one' and all their problems will be solved)***.
But when the government does it, hang on to your hats. No problem, just raise the 'debt ceiling' and wave the magic wand while mumbling "Abracadabra" in a massive game of financial alchemy. Yeah, keep spinning the freaking plates 'til they all come crashing down.
I'd like to use some stronger language to describe my opinion on the matter, but I'd rather not get banned.
People buying things they cannot afford to pay off over time are stupid, as are their lenders. Bad business is bad business. That is the private sector problem.
Governments spending too much could be silly if on silk stockings. And can cause inflation, or not. But monetarily sovereign can always create more money if necessary, and never pay it back. If the USA has to fund a world war, money should not be the problem. Limited resources and/or productivity can be.
You should be ashamed of yourself. Those are not "investors", those are ordinary hard working Americans who don't earn any interest on their own savings. The Fed has been rewarding Con-Men, Shysters, Thieves, Speculators and destroying responsible savers.
I hang my head in shame. The same rigged system you describe rewards ordinary hard-working Americans who can shake off the paralyzing fear and participate. Lemons for the fearful turns into lemonade for those who want more.
yep , just about anyone with a 401k or ira has been rewarded as long as they did not make the mistake of trying to stay in cash instruments long term . that is a big mistake regardless of rates .
if they didn't have one than the truth is they likely have no money to get interest on anyway and are saving much more because of the low rates saving them money .
but , hey , that kind of news makes for terrible headlines . americans only like reading the negative news . no one wants to hear others are doing just fine and it is only them failing at it .
Savers in the USA get screwed (or those that actually live below their means) while spenders and people in debt make out big time.
Is this really how we want the system to work?
You seem to think the action of saving is synonymous with the owning a savings account. It isn't.
Saving is the accumulation of assets, I'm a saver and most of my assets are in stocks and bonds. Nothing wrong with a savings account, but if you believe it should be your primary source of investment income you're doing it wrong.
the reality is going to be that 1/2 of america has no savings to get interest on . the other half which does , if they have any financial sense will not throw it in 100% cash instruments . they will have diversified portfolio's regardless of rates .
savers are getting hurt makes great headlines . but it really is something that will only effect those with little financial understanding and sense . even just bonds had great total returns since the fed announced do not stay in cash instruments years ago .
thinking you are taking no risk by being in cash instruments is a fallacy . you lost money through negative real returns 1/3 of the time the last 45 years .
it is in fact the most riskiest bet .
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