How Uncle Sam is killing your savings
October 21, 2009
– Comments (6)
Despite what the idiotic article in this week's Barron's says, I realize that the government has little choice but to keep interest rates as low as possible for the foreseeable or risk the economy completely falling off of a cliff. However, as a yield-hound who likes to invest in dividend-paying stocks and bonds that obviously pay interest this article struck a chord with me:
How Uncle Sam is killing your savings
This is a quiz. What do the record-high Wall Street bonuses have in common with the record-low yields for savers?
Answer: They show yet another way that prudent people, especially those living on fixed incomes, are being screwed by the government's bailout of the imprudent.
Here's the deal. The government is spending trillions to keep interest rates down in order to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers' incomes.
"It's a direct wealth transfer from savers and retirees to overly indebted borrowers," says Greg McBride, senior financil analyst at Bankrate.com...
But until rates go up, Wall Street will be chowing down on essentially free money, while fixed-income people living off their investments will have to eat into their capital, take more risk, or reduce their standard of living. A nice reward from their government for a lifetime of saving. Thanks for nothing, guys.
Deej
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