Tags: Interest | rates | savers | governments

NYT: Meager Interest Rates Hurt Savers, Help Governments

By    |   Wednesday, 12 Sep 2012 07:47 AM

What’s good for governments isn’t always good for their citizens. That fact is being borne out sharply on the interest rate front.

In many countries, near record low rates are helping governments by lowering their borrowing costs, but hurting savers by lowering their interest income, The New York Times reports.

“If you ask a central banker is that what you’re doing [trying to cut government borrowing costs], and why you’re doing it, they’ll say ‘No, we’re just trying to get the economy going by making it easier for the private sector to borrow,’” Neal Soss, chief economist at Credit Suisse, tells The Times.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

“But I have a syllogism for you: the government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”

To be sure, central bank rate cutting does indeed make it cheaper for the private sector to borrow. But that comes at the cost of hardship for people like the elderly, who depend on interest payments for their income.

In any case, many economists expect the Federal Reserve to announce another round of quantitative easing at its meeting this week, as the central bank seeks to reduce rampant joblessness.

“He [Federal Reserve Chairman Ben Bernanke] wants to do whatever it takes” to reduce the 8.1 percent unemployment rate, Michael Feroli, chief U.S. economist at JPMorgan Chase, tells Bloomberg.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
263
2012-47-12
Wednesday, 12 Sep 2012 07:47 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved