I think it's not unreasonable to ask for "beats inflation" in non-crisis economic times. I still recall my first savings account paid 6.44% in 1987 or so, and

I think it's not unreasonable to ask for "beats inflation" in non-crisis economic times. I still recall my first savings account paid 6.44% in 1987 or so, and the inflation rate then was ~3.5%. It was with Lincoln Savings, which some of you might remember had a little collapse problem shortly thereafter. Still, the next one I went to (actually, not due to the collapse) paid 5%. The traditional story of how a bank works, usually presented in comic-strip form somewhere around 10th grade civics class, was roughly: * Inflation is M% * Retail lends the bank money at N%, for some N typically >= M. The primary motivation for doing so is less the interest, and more that it's safer to keep the money there than in a dresser drawer where the kids will eventually find it and exchange it for snack foods that are colours that don't exist in nature and premium currency for borderline-pornographic F2P games. * The bank lends it to productive economic entities at N+3%, who convert it into PowerPoint slides, bribes for Congressmen, and freight costs for shipping productive assets from Illinois to Guangdong. * The 3% spread enables the bank to sponsor various golf tournaments and buy impressive buildings that totally weren't a Del Taco last year, to ensure you feel secure that they'll still return your money when asked politely. I suspect what derails the entire narrative is when the bank no longer needs retail to lend them money. When central banks will do it for virtually free, there's no reason to try to wrangle depositors anymore.