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Falling interest rates inequitable effects

A couple of weeks ago, I blogged about an investment adviser's characterization of the Federal Reserve's near-zero interest rate policy as essentially an invisible tax.

As the economy continues to plod along, unmoved by a 0.25 percent interest rate, savers are starting to get more agitated.

The reason, notes the New York Times, is the "government policy meant to push down interest rates to a point that businesses and consumers are compelled to borrow and spend again … is hurting anyone with a savings account."

And, I might reiterate, the policy apparently is not doing much to achieve the stated goal of getting borrowing and spending up to a point where the economy reignites.

Couple looking in their savings account book

Not to run this into the ground, although I am personally ticked off as the hubby and I don't owe anything but our mortgage (at a nice, low rate) and would like to see our liquid savings earning a bit more than a few dollars a month, but this interest rate inequality really needs to be addressed.

The conventional economic playbook is not working. We're creating a whole other crop of fiscal problems for savers, who were just a few years ago the holy grail of money gurus when most Americans then were spending wildly and not saving a cent.

Not to be too simplistic and Pollyanna-ish, but can't we find a fiscal middle ground? Do we always have to go from one financial extreme to the other?

My colleague Greg McBride offered a colorful, and apt, description of the situation in the article in today's New York Times: "It is a trend on steroids now because interest rates have been cut to the bone."

Well, it's time to just say no to these financial drugs!

I'm not asking for 10 percent on my money market account (although I wouldn't turn it down!). But if banks can collect 4 percent on a mortgage loan, why can't they at least give me 2 percent on my savings? 

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Because the banks run the show, and must be made solvent at all costs. Again: What's good for banks is good for America. The sooner you figure that out, the better off you'll be.

My wife and I are in the same boat as you: We have no debt other than our 15-year, fixed-rate mortgage. We have ~7 months of savings in the bank. We're basically forced to utilize rewards checking accounts to get ANY sort of return on our savings.

It *is* very much an "invisible tax" on savers and the prudent.

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