The Fed Doesn’t Owe Us Anything
“Savers need to stop whining,” said Matt O’Brien. Bank accounts may be yielding next to nothing, thanks to the Federal Reserve’s near-zero interest rates, but last I checked, we’re “not entitled to getting 4 percent returns from the Fed.” The central bank’s job is to keep the economy growing fast enough to keep unemployment down without spurring inflation. It’s not to guarantee seniors and others interest income on their savings. There are still plenty of ways to get the returns most of us crave. That’s exactly why the Fed has kept rates so low—to spur us to put our money to work in stocks and bonds “instead of just sitting on it.”
That may not seem fair to retirees who don’t want to stomach risk. “But life, as you may have noticed, isn’t fair.” Consider what would have happened if the Fed had raised rates before the economy was ready. Savers would have been a little better off for a little while. But then the Fed would have had to lower rates again because of the weak economy, delaying the day they could finally be raised for good. “It’s hard to think of anything that’d be worse for savers than giving them what they want.”
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