A Sign of the Times

You can’t help but feel for retirees on fixed incomes and other risk averse individuals around the world who, in their minds, have no choice other than to live with low yielding super-safe bank deposits, something that, unfortunately, may no longer be the exception, but the rule, for the foreseeable future.

Their lament is put into fine context in the opening paragraphs of Catherine Rampell’s NY Times story.

A consumer complaint is ricocheting around the world: low interest rates are eating away at savings.

Bill Taren, a retiree near Orlando, Fla., discovered in August that his credit union would pay only 0.4 percent annual interest on his saving account, even though inflation averaged 2.8 percent over the last year. So he and his wife decided to just stuff their money in the mattress, he says, because at least there “we can see the cash when we want.”

Of course, the solution to Bill’s problem is to eschew such investment choices as Certificates of Deposit and Money Market accounts and jump into speculative investments where the returns are, potentially, much greater, all of which will somehow give the economy a boost and get things back to the pre-2008 normal.

Clearly, this isn’t working, but that won’t stop policy makers from doing more of the same.