Thursday, February 18, 2010
The Fed's Cross of Paper
"If you're a retiree who relies on interest income, you know that the tap is running dry. In fact, many investors in certificates of deposits, savings accounts and money market accounts are losing money once taxes and inflation are subtracted from today's extremely low yields. Less well known is that measly savings yields are central to the government effort to buy time for the banks to earn their way back to health. It is important to rebuild the banks. But more attention must be paid to the collateral damage from that effort. Here's what's happening: By lowering the short-term interest rate it controls to virtually zero and creating lending programs, the [Fed] has enabled banks to borrow cheaply. ... The result is presumably healthier banks and certainly poorer savers", NYT Editorial, 18 January 2010, link:
Fed policy is: "Crucify savers on a cross of paper". Where is a William Jennings Bryan today to challenge the banksters and their apologists in the US government?