Dear Citizens and elected officials:
Yes, yes, I know, how dare I distract, no matter how politely, our President’s attention just now: he’s consumed with negotiations in Congress, fighting a Pandemic, and the Climate Crisis, with the very weak tools that Neoliberalism, the corporate sector and the Republican Right have handed him and us since the mid-seventies. And he is trying.
When I saw this article today in the NY Times, about the interest rate “climate” oppressing the little guy — I don’t want to say little woman — I just had to write a quick comment.
Here’s the article by Neil Irwin, one of the main financial writers at that paper: www.nytimes.com/…
Just so you can see the title here before you go there, it’s “This is a terrible time for Savers: In an upside-down world of financial markets, expected returns after inflation are at record lows.”
Don’t you remember the time, in the 1990’s if I recall correctly, when the brilliant financial types were bemoaning the poor character of the bottom 90% for having no savings habits, thereby hurting the accumulation of investment capital? I do. And there you had it: why American productivity was falling. What a fabulous tale that was - compared to the actual way capital and savings are accumulated by firms like Apple and Amazon and Walmart - but that’s a story for another day.
For the struggling American, the St. Louis Fed has been telling us for years now that about 50% of our nation’s families have saving of less than $400, and can’t meet even the mild little financial crises that come everyone’s way. (I was one with low funds at the end of the month for a long time and probably will be again.)
Here’s what I had to say in a “formal” comment to Irwin’s article:
billofrights
Maryland50m ago
Thank you for this polite introduction to economic "TINA" (there is no alternative) and the cruel world of rates for the bottom 90 percent of us. Please though Mr. Irwin, explain to us why savers can't find - or could a policy ever mandate, a category of savings accounts that would pay 5%? Maybe that could only happen with public banks who were given start up capital from public sources...And the corollary: reducing the rate banks and other financial institutions charge on credit cards from 15-23% (and higher) to 8-12%. There's no reason the Congress, Treasury and Fed could not mandate that...they could cite all the passages in the Old Testament which the Religious Right won't tell us about, but which Michael Hudson and David Graeber did.
1 REPLY
Jack 1952 commented 22 minutes ago
@billofrights Food for thought....As to your credit card interest rates, that and home mortgage rates seem to dance to their own tune to some extent. I think, one of the reasons that those rates are what they are is to cover bad loans and fraud in those areas.Case in point. I recently had a $8000 charge to my credit card for 'services' at a prominent university. My credit limit on my card was $5k, so how did that happen ? I received no call to confirm I made the purchase. And then had to endure the hassle of getting a new card and updating merchants...Fraud and bad loans are, IMO, endemic in those areas, and to cover those costs, we, the user must bear those rates...
As you can see dear readers, I haven’t answered Jack 1952 who gave the standard bank reply, missing just a part; of course we have to charge a lot because of all the fraud out there...and the missing part: the rates are common sense “fair”: we charge more to bad credit risks…
Which of course doesn’t explain the evolution of the rates via all the de-regulation of banking since at least the Bill Clinton-Bob Rubin-Alan Greenspan days.
And while you are thinking about this, and the inevitability with which Mrs. Thatcher coined the term “TINA,” think also about one of the core theological, moral and deeply political cores of the Religious Right in the US, and which reoccurs time and time again in the spate of books published recently explaining why Rural Red state American, Trump country, hates we “coastals” so much, our snobbism and heaven forbid, our intellectualism...that the reason we have so many poor is their own moral weaknesses and failures. They deserve their fate due to their own character shortcomings, and no public policy, least of all one which takes from the hard working and virtuous tax money, from the righteous — planning to futilely give some to those with $400 or less in savings...well…and the close inverse of this, fully demonstrated by the former President, the Donald, out on the links: Righteousness is rewarded with wealth.
Do you ever recall an AFL-CIO speech which took this stern timber from deep in the heart or hull of American (and European) Protestantism, and gave it the full broadside raking it deserves?
I don’t. And that’s one good reason, brought down to earth that we don’t have a savings account offering 5%, and credit card rates around 8-10%.
thank you very much for listening…
Bill of Rights
Western Maryland