IN THE WHAT?? DEPARTMENT
Boy, talk about schizophrenic economics, here’s a gem of an article I ran across. Seems some folks are worried about hard working people SAVING TOO MUCH. Yeah, that’s correct, SAVING TOO MUCH. Seems depositing your cash with the local bank causes them a problem.
… deposits in US bank accounts is at a blistering pace this year, sending deposits to record levels near $10 trillion…
I thought we were supposed to De-leverage, not go out and borrow for the sake of borrowing. Now, we’re told saving money is a bad thing?
…The large amount of cash only adds to expenses such as paying for deposit insurance premiums. ... [banks] have slashed interest payments to discourage customers. Wells Fargo & Co. ... halved its payments on one-year CD’s to 0.1%; Citigroup ... dropped its payment to a paltry 0.3%....
You tell me, officially, the rate of inflation is 3.6%(BLS). That is a NEGATIVE REAL RATE on a one year CD with Citi and Wells.
Shoot, the fed pays the banks 0.25% on excess deposits parked withthe government. Whoa! I get it, banks make more money from interest paid by the federal reserve on their excess reserves than lending. Better yet at no cost of FDIC insurance. Some people might call that a quasi bailout.So, what’s next? 0% on a one year CD? Or, the bank charges the customer for the privilege of accepting your cash? Savers and folks onfixed incomes get screwed again.
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