This is a serious post. Probably the most serious I’ll post all year.
My wife and I did what we were told we should do. We saved our money. We lived less considerably below our means so that we could save our money.
Now we’re retired (somewhat earlier than planned, through no fault of our own, but never mind…)
And now the Fed is essentially saying “Screw you. We hate savers. You are required to invest and borrow. Saving is for idiots.”
Which is to say: We can’t get decent rates on CDs or other guaranteed savings–because the Fed plans to keep interest rates at essentially zero for what sounds like pretty much forever.
Would we be happy to get interest rates equal to inflation? Not really–but I don’t even believe we can count on doing that at this point.
We don’t much like risk. We spent less money–a lot less money–so we wouldn’t have to cope with risk.
That apparently offends the Fed.
As far as I can tell, the methodology being used by the Fed basically enriches Wall Street, as it forces more people to invest regardless. It’s doing a pretty good job for bankers, too. Basically, those who were already getting richer are getting even richer.
I don’t believe it’s bringing lots of people back to work. Companies that can borrow at no interest seem to keep enriching their owners, managers and shareholders, and hiring the absolute minimum number of workers they can. (If zero-interest loans were only for small businesses, which create most new jobs, that would be different.)
But for us and, I believe, a few millions or tens of millions of other people, it looks like direct punishment for not being massively in debt and for not being gamblers: Making sure that we can’t earn decent return on savings.
And I think it stinks.
I forgot to add this crucial point:
If we could get decent rates on savings, we’d spend more.
As it is, fear of long-term major issues and knowledge that we’re getting crap on our savings–and that it’s likely to get worse, not better–is keeping our optional spending lower than it should be.