http://www.businessweek.com/magazine/content/08_37/
b4099087568542.htm?chan=rss_topStories_ssi_5
Fair Value September 4, 2008, 5:00PM EST
Why American Savers Have Drawn the Short Straw
There are painfully real reasons why America’s savers feel they’ve got the short end of the stick
by Roben Farzad
BW Magazine
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American savers, take a bow. This is your moment of vindication. Your hour of glory. And you earned it (in a manner of speaking).
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Good for you! Your reward: injurious savings yields, inflationary rot, and election-season neglect, all served up with a dollop of institutional insecurity.
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Indeed, a year ago, a six-month certificate of deposit earned, on average, 3.53%, according to Bankrate.com (RATE). Today, that’s down to 2.03%. A one-year CD that earned 3.75% at this point in 2007 was offered for as little as 1.92% in April, before inching up to its present 2.38%. It’s hardly a secret that banks are only able to pay out such pittances thanks to depositors’ knee-jerk desire for security: “Hey, I might be earning crumbs on my cash, but at least I’m not losing money.”
Sure you are. Wholesale inflation has soared 9.8% in the past 12 months, the highest clip since 1981. The more widely cited consumer price index jumped to 5.6%. In other words, while your saved buck was adding 2 cents or so on one end (and even less after taxes), three times as much was getting singed off the other end of that dollar bill. “Inflation is just deadly to savings,” says David Gitlitz, chief economist at TrendMacrolytics, an investment adviser. Gitlitz observes that, taking into account the hit from inflation, rates haven’t been this negative since the dreary 1970s. (That, in turn, gave way to an early ’80s that saw the worst inflation in U.S. history since the Civil War.) “It steals your purchasing power and sets less and less of an incentive to keep money in the bank.”
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So, what are the politicians saying about this PARTICULAR pig? Oh I’m sorry, they are only chatting about who put lipstick where!
Argh!
Only Ron Paul even had a glimmer of a plan.
“Savers” are fools. They have to be “Investors”. And, you laugh at my fascination with gold coins and other forms of commodity money.
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