All of us are bemoaning the low interest rates on savings. This is another blow to the Americans who save rather than spend, and is a direct result of the Bernanke/Greenspan policy of helping the underwater lenders. Today’s Wall Street Journal had a good article about how enforced low interest rates are an underhanded way of helping banks by helping their spreads–the difference between their cost of funds and their lending rates. It has added directly to their profits of late, and it does so by taking it out of the hide of the few remaining Americans who actually save up for purchases, retirement, etc.
Some of these same policy-makers admonish us for not saving enough compared to the Japanese, europeans, and Chinese. Yet when inflation and taxes are taken into account, the real rate of return on even the best CDs is about a minus 3% per year.
