Profile image
By BARRACUDA (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

Does Bernanke Hate Old People?

Thursday, September 6, 2012 10:50
% of readers think this story is Fact. Add your two cents.

(Before It's News)

By Ned W Schmidt CFA09/06/2012

A question that follows from the above is also of interest. Why is Bernanke transferring so much income and wealth from savers and investors to mega-banks and other speculative funds? We are of the basic crowd that believes that actions are more important than words. Since Bernanke has assumed a dictatorial role at the Federal Reserve, savers and investors have been punished. We need only look at the poor plight of savers to see the imposition of the Bernanke Wealth Tax.

Bernanke Wealth Tax

On savings accounts
$160 billion transferred
from savers to speculative funds & mega-banks

Reliable data on the savings of retired people and those over the age of 60 in the U.S. is not readily available. An important element in those savings is the standard savings account at a bank. We suspect that a substantial portion of those deposits are owned by the retired and older citizens worried about retirement. Given all the caveats on data, let us start by just looking at the Bernanke Wealth Tax on those with savings accounts.

In the latest weekly report from the Federal Reserve savings accounts held $1,600 billion. We all know our banks are paying us near nothing due solely to Bernanke’s monetary policy. Let us make the math easy. Assume these accounts earned a grand 0.5% per annum interest rate. That would result in $32 billion in interest income being paid to old people and other savers.

What interest rate would be a fair rate for them to earn? While admittedly a tough number to estimate, if we look at inflation, near $4 gasoline, and the financial uncertainty of the world, 3% per annum would certainly be fair. Should that be the case, savings account should be earning $192 billion of interest income.

In short, holders of savings accounts are losing out on ~$160 billion of interest income, and that is probably a low estimate. That lost income, instead of paying for gasoline, prescriptions, and trips to see the grandchildren, is being transferred to speculative funds and mega-banks. We are not about to say that Bernanke hates old people and other savers. But, if it walks like a duck . . .

The Bernanke Federal Reserve has also persistently voiced the opinion that it intends to keep interest rate low for an indefinite period. Somehow that is supposed to be good news. If one is a saver, that is as bad as news can come. That means the Bernanke Wealth Tax will be imposed on those with saving for an indefinite period. As far as can be seen into the future the Bernanke Federal Reserve intends to transfer massive amounts of potential income, $160 billion per year for holders of savings accounts alone, to speculative funds and mega-banks. Some hope does though exist as Romney has announced he intends to end Bernanke’s reign of monetary terror.

Investors now await the September 12-13 of the FOMC. At the meeting another round of QE of some form could be announced. Not satisfied with imposing the Bernanke Wealth Tax on simple savers, at this meeting they may impose another round of the wealth tax on every single owner of U.S. dollars. What else is QE? By injecting unneeded reserves into the financial system the intrinsic value of every dollar owned is reduced. Again, the beneficiaries of the tax will be speculative funds and mega-banks.

MORE HERE

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories
 

Featured

 

Top Global

 

Top Alternative

 

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.