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The Fed keeping interests rates as low as they have punishes savers. Can't put all the blame on households for that.
by jtardie 15y ago
The Fed keeping interests rates as low as they have punishes savers. Can't put all the blame on households for that.
- cs702 15y agoThe Fed wants savers to invest in riskier things -- new businesses, new projects, expansions, etc. -- so it has pushed rates on safe investments like treasuries to zero (three-month US treasuries pay 0.01% right now). The idea is that this will provide an incentive for savers to invest in things that will produce economic growth. Yet despite the Fed's success at pushing rates down to zero, savers still want to invest predominantly in assets perceived to be safe (like treasuries and FDIC-insured bank accounts). When consumers are strapped under the yoke of debt and can't buy more stuff on credit, no government effort to get businesses to invest more can work...