Terrible aspect of Obama/Bernanke years has been harsh punishment of retirees with near 0% interest on savings which creates a mass wealth transfer to speculators and indigent (and of course the unemployed through no fault of their own) whilst having done little to improve the real unemployment rate. There may well be Worse for savers to come as they were forced into speculative sharemarket because of artificially low interest rates. A crash will destroy them.The market is currently on a downturn,whether this marks the start of a major correction is unknown but one will come.
Now the US$ is sinking like a stone, whilst 10 year interest rates rise.Deliberate assistance to exporters whilst punishing hard hit savers? It is inevitable that there will be a major share market correction and
savers will see their supposed gains wiped out with the further loss of the potential albeit minuscule interest they may have had in whatever savings vehicle might have given them the best gain. Retirees don't often have the "ten years period to smooth out market ups and downs" and any major crash will be disastrous for many.
I reproduce expert opinion on this terrible policy of causing untold human misery from two posts written earlier this year. The message, allowing for market fluctuations, is at core still sadly valid, and will have untold consequences. the destruction of the middle/lower middle class in Germany through market calamities was the final factor in bringing Hitler to power-who knows what might happen in America if a similar thing happens in the near future after the collapse of "Hope and Change"?
Fed's Interest Rate Policy Is Utter Theft From Retirees/Savers To Prop Up Obama Admin.
The result has been patchy at best after four years but the loss of income for savers is a certainty. This has forced many into the speculative stock market which has,with ups and downs, given a return. However it comes with anxiety and uncertainty and could end in tears-the savers after a lifetime of toil, don't deserve to be treated so callously.
Economic commentator Jim Willie discusses (full article AT THIS LINK) another aspect of the Fed's interest rate policy-the distortion in the marketplace it causes and the possible long term results. That negative results are a near certainty is in line of course with what happens when the government interferes in the free market. Willie is colorful in his language but that does not mean that his premises are wrong and many of the truths he espouses are time proven and obvious. Food for thought and a reinforcement of conservatism.
The Jackass message has been steady and relentless. The 0% cost of money makes for a grotesque distortion in asset prices, all of them. Nothing is properly priced. The free money results in rising cost of everything rising. All categories rise inexorably within the cost structure. Wages do not, thanks to the forfeit of industry to Asia, in particular to China. So the squeeze on capital continues unabated and with ferocity. Capital is killed. By that is meant that marginal businesses and segments of business units within larger corporations will gradually respond to higher costs (equipment, materials, fuel, shipping) by closing the businesses. Workers are cut, but more importantly capital is retired, equipment is turned off, and capital is liquidated. A truck or machine or computer or telephone system might be sold off. The rising costs and more rigid final product prices dictate business shutdowns, since the profit margin is squeezed, then goes negative, forcing business decisions. The destructive effect on working capital from 0% money remains the single most blind spot of American and Western economists. They call it stimulative, when it is the exact opposite. They are badly educated. They are compromised by their paychecks. They are dead wrong, blind to the death of capital beneath their arrogant noses. Gold will benefit from the free money provisions, and head north of the $2000 price with ease. Gold will serve as capital sanctuary under attack.
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Fed's Near Zero Interest Rate Policy-Recipe For Disaster?
In an article at Yahoo Finance from US News and world report by Philip Moeller entitled "Near Zero Interest Rates Challenge old Bond Portfolio Rules AT THIS LINK Moeller leads with the following;