Tuesday, August 9, 2011

The Federal Reserve Continues Its Redistributionist War on Savers

Today the United States Federal Reserve, according to the Wall Street Journal (link), "signaled it plans to keep its benchmark short-term interest rate close to zero for at least another two years as it sharply downgraded its view of the U.S. economy."

Who continues to benefit from this ultra-low interest rate environment?  Bankers, big net Obama contributors in 2008, who can continue to borrow at near-zero rates and lend at 5-6% or better.  As Larry Kudlow is wont to say on his CNBC show, "even a banker can make money this way." 

Whom does this hurt?  Savers.  Retirees on fixed income who live off the interest on their lifelong savings.  Their dollars are earning a pittance.  But I don't expect AARP, the American Association of Retired Persons, to protest, since it has long ago betrayed its ostensible constituents and gotten into bed with Obama and the Democrats to protect its real source of income that supports all those AARP administrative jobs -- selling insurance to seniors, now protected if not well-advantaged by its connection with Obama and the Democrats.  That is, at least for now, while Obama is in.  This may change. 

Who also benefits?  The US federal government, which at the present politically means Obama, which pays lower interest rates on its debt.

Continued ultra-low interest rates is a hidden, sneaky redistributionist tax on wealth – a tax on those who saved all their lives who now get little interest, now accompanied by the inflation which is how the federal government will resolve its big debt.  Both benefit not savers but debtors -- Obama's and his acolytes' core constituency.

John M Greco

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