As Low Rates Depress Savers, Governments Reap Benefits
A consumer complaint is ricocheting around the world: low interest rates are eating away at savings, the New York Times reports.
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.”
Jeanne and André Bussière, in
Annecy, France, have a stable pension and a bank account that pays 2 percent
interest — “almost nothing,” they say — even though the consumer price index rose
an average of 2.5 percent over the last year.
Jiang Rong, an information
technology professional in Xiamen, China, decided to dive back into the
speculative real estate
market rather than watch his savings wither at the
bank. In China, too, the cost of living is outrunning savings, as local
restaurants nearly double their prices.
The fact that interest yields are so
low in so many parts of the world is no coincidence. Rates are determined not
only by markets, but also by government policy. And right now many governments
say they have good reason to keep their own borrowing costs as low as they
possibly can. Just last week, the government’s report on job growth in the
United States showed continued weakness, and an international forecasting group
warned that the European economic powerhouse, Germany, will fall into
recession
later this year.
Read more: CNBC.com Article:
No comments:
Post a Comment