{"id":3267,"date":"2022-05-19T19:59:02","date_gmt":"2022-05-19T19:59:02","guid":{"rendered":"https:\/\/www.pbmv.com\/blog\/?p=3267"},"modified":"2022-05-19T19:59:02","modified_gmt":"2022-05-19T19:59:02","slug":"the-fed-has-destroyed-our-savings","status":"publish","type":"post","link":"https:\/\/www.pbmv.com\/blog\/?p=3267","title":{"rendered":"The Fed Has Destroyed Our Savings"},"content":{"rendered":"<p>by <a href=\"https:\/\/schiffgold.com\/commentaries\/the-fed-has-destroyed-our-savings\/\">Michael Maharrey<\/a><\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter\" title=\"inflation_savings.jpg\" src=\"\/blog\/wp-content\/media\/images2\/inflation_savings.jpg\" alt=\"inflation_savings.jpg\" width=\"480\" height=\"284\"><\/p>\n<p>When I was about seven or eight years old, I remember my mom taking me to the bank to open a savings account. She explained that if I put some of my allowance in savings, that money would grow over time.<\/p>\n<p>Well, that doesn\u2019t work anymore.<\/p>\n<p>In fact, if you put your money in a savings account, you\u2019ll end up with less than you started with \u2013 at least in terms of real purchasing power.<\/p>\n<p>The last time a cash savings account yielded enough interest income to beat inflation was in 2007.<\/p>\n<p>This provides yet another example of how Federal Reserve monetary policy creates misallocations and distortions in the economy.<!--more--><\/p>\n<p>Looking closely at the chart, you\u2019ll notice that savings yields fall below the inflation level when the Fed engages in loose monetary policy.<\/p>\n<p>The first dip below the inflation level is in 2002 \u2014 in the wake of the bursting dot-com bubble. In 2001, the Fed began pushing interest rates down. It started at 6% in January 2001 and by January 2002, rates were pegged at 1.25%.<\/p>\n<p>We see the next plunge in savings yields in 2008, as the Fed dropped rates to zero and launched quantitative easing in response to the Great Recession.<\/p>\n<p>Since then, savings have never recovered. Cash accounts failed to generate enough income to beat inflation even during the \u201clow inflation\u201d years after the financial crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>by Michael Maharrey When I was about seven or eight years old, I remember my mom taking me to the bank to open a savings account. She explained that if I put some of my allowance in savings, that money would grow over time. Well, that doesn\u2019t work anymore. In fact, if you put your [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3267","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3267","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3267"}],"version-history":[{"count":1,"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3267\/revisions"}],"predecessor-version":[{"id":3268,"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3267\/revisions\/3268"}],"wp:attachment":[{"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3267"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3267"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pbmv.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3267"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}