To put the absolutely dismal interest rates we are getting on savings into perspective think of it this way. The highest yielding 1-yr CD pays 1%. At that rate, it takes 70 years to double your money. By contrast at 5% it takes only 14 years. And, at 10%, it takes just 7 glorious years. Because rates are so low, investors speculate in gold, oil, copper, and other commodities while interest poor granny sits alone in the dark.
Tag Archives: Fixed incomes
Can I Interest you?
While low interest rates are designed to encourage consumers and businesses to borrow and invest (with little success) the policy has hurt millions of older and retired persons. With money market funds paying 0.10%, 5-yr Treasuries paying 1.0% and 10-yr Treasuries paying 2.0%, interest income has drastically fallen. These folks now eat out less, buy less and with inflation at 3.6% are seeing their real incomes rapidly decline.
Winners and Losers
Because Quantitative Easing Two (QE2), which is soon ending, forced interest rates down to record lows, stocks and commodities soared as investors’ searched for better returns than those available on Treasuries. US exporters also enjoyed the lift they received from the weak dollar. But, seniors were pounded as their savings have been earning virtually nothing. Granny can’t wait for QE2 to end.