So, Federal Reserve Chairman Ben Bernanke signals that the Fed will be cutting interest rates again, this time perhaps by a half percent.
Oh, it'll be great for the economy, he says.
Consumers and businesses face tight credit conditions, as financial markets indiscriminately shun mortgage-related investments, good and bad, and banks hoard money to protect their own balance sheets, he said.
What is never said is that for poor schlubs like me, it means the interest earned on savings and money market accounts goes down. Follow me down...
Yep, back in September, when the Fed's ongoing round of rate cuts began, my money market account was earning a 4.3% APR. It's currently down to 4.1% APR, and will no doubt drop well below 4% with this anticipated rate cut at the end of the month.
That's less money going into my pocket.
Now I know economics are complicated, but still, it galls me to have these interest rate cuts presented in such glowing terms. I don't recall seein a single mention in the many articles I've seen about how these cuts affect working class and middle class savers.
Yes, I do have some credit card debt. But it's all locked into low life-of-the-loan rates on a couple cards of 1.99% to 3.99%. Any cards I use for month to month expenses are paid off in full every month. So that fight against tightening credit markets, that incentive for credit card companies to lower their interest rates (as if!) mean nothing to me.
All it means is less earnings for me.
Yes, on occasion, I have leveraged some good offers by credit card companies into a little bit of cash. There have been several times over recent years when I've taken advantage of 6-12 months of 0% or 2% interest offered with no fees, borrowed as much as $20,000, let it earn money market rates, then pay off the card when the promo rate ended. But those deals have dried up over the past year, and I haven't noticed any improvement in the deals coming in the mail since these rate cuts began. So no, this bailout of the credit markets doesn't do a thing for me.
Except take money out of my pocket.
Yes, I have a mortgage. But it's a fixed rate mortgage, and we have no imminent intentions of selling. So again, these macroeconomic machinations don't mean diddly to me.
Except that my savings earn less.
And since these interest rate cuts are can exert downward pressure on the dollar, it's likely that inflation will get a boost. Guess who loses there too?
And in a economy where consumer spending drives 70% of the economy, taking money out of the pockets of the few meager savers in this country can't be a good thing.
OK, I'm through bitching for now. And I didn't even get into how tired I am of hearing Republicans try and convince me that making the rich pay less taxes is somehow a real windfall for me....