‘Using Our Money to Steal Our Money’
The comments below are an edited and abridged synopsis of an article by Daniel R. Amerman
The US now has the highest rate of inflation in 40 years, but it is much more painful than it was 40 years ago.
The difference is that 40 years ago interest rates were higher than the inflation rate, so Americans could keep up as savers. However, they now have effectively 0% interest rates. This translates to fast and painful monthly decreases in purchasing power that are occurring right now for anyone who has money in the bank, or in a money market fund.
What makes it worse is that the near 0% interest rates are not natural, but the result of major Fed market interventions and, since 2008, the new primary source of funds for the Fed has been the spending power in Americans’ bank accounts.
The Fed is using the money deposited in bank accounts to force major inflation-adjusted losses on the value of the money that is in those bank accounts. There is nothing natural or normal about this; it is a taking on two levels with the government benefitting on both sides, and the citizens losing on both sides.
Up for discussion: Recent developments with negative interest rates; the source of the money; and artificial and deepening losses.