Nameless Critics Attack the Fed at the NYT

January 26, 2012

In an article that told readers of the Fed’s plans to keep its zero interest rate policy through 2014 the NYT commented:

“there is growing criticism that the Fed’s policies are unfairly taking money from savers, including many seniors who planned their retirements around the interest rates that low-risk assets like bank deposits used to pay.”

It would have been worth pointing out that one of the goals of this low interest rate policy is to get savers out of low risk assets and into something like stock that can provide a higher yield and also potentially give money to firms that are looking to raise money for investment. If a retiree has $100-200k in bank accounts, it is a fairly simple matter to shift $10-$20k into a low-cost stock index fund. This would imply some increase in risk for the saver, but it could mean much higher returns.


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