Why Rising Interest Rates Won’t Benefit Savers

[Newsjock]

http://finance.yahoo.com/blogs/the-exchange/why-rising-interest-rates-won-t-benefit-savers-191034426.html

If there have been any victims of the Federal Reserve’s easy-money policies, they have been old-fashioned savers. People who rely on income from CDs, bank accounts and other supersafe assets have watched their cash flow dry up as interest rates have fallen to record lows.

With the Fed now signaling a pullback on some of its easy-money policies, interest rates on some types of loans are rising. Yet savers may continue to suffer because the Fed is coaxing up long-term rates while continuing to keep short-term rates extremely low. The paradox is that rising rates are punishing some consumers — such as those interested in buying a home — with no corresponding benefit to ordinary depositors. “This is not a positive development for savers,” says Greg McBride of Bankrate.com. “Banks are not going to boost yields.”

... The market itself is helping keep interest rates on bank deposits low as well. Deposits at banks have grown by more than lending during the past several years, which means banks have more deposits on hand than they need to meet demand for loans. With lending still at depressed levels, banks have no incentive to pay higher rates on the deposits they hold, since they can’t make up the difference by lending out the money at higher rates. “Banks have plenty of deposits they can’t lend out as it is,” says McBride.

For savers, there’s really nowhere to hide. Rising rates on Treasury bonds make those a slightly better investment, yet most people buy Treasuries through bond mutual funds, which stand to lose money as rates go higher.

[riverbendviewgal]

1. make your bucket list and

Do it? Screw the rest of your time.

[geek tragedy]

2. The program hasn't been designed to encourage saving, it's been to encourage

spending to goose the economy.

[SoCalDem]

3. The big shots NEED for us to gamble

Our economy is now based on a casino methodology.. the "house" always wins..

There are always just enough "winners" paraded around to make the dopes think that they too can win. if they just keep on putting their money down on the line (and into their 101-ks).

SS keeps being attacked politically, there are few pensions left, and those that are still existing are constantly under threat, so all we really have left to us is ....luck.

Luck is fine, but when the casinos are hopelessly rigged against us... well.. we all know what happens.