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Savings accounts and the Fed

 
JesseDart
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User ID: 1596989
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08/17/2012 11:07 PM

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Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

Fast forward 30 years, and the longer you have your money in the bank at today's rates, the more you lose.

My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?

I'm hoping somebody knows because this is something that has bothered me for years and I can't seem to find the answer.

Anyone?
JesseDart (OP)

User ID: 1596989
United States
08/17/2012 11:30 PM

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Re: Savings accounts and the Fed
Nobody knows?
Anonymous Coward
User ID: 21346179
United States
08/17/2012 11:32 PM
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Re: Savings accounts and the Fed
I moved my shit out today. Not going to get .1% interest to let them lend out my principal 45X with interest... a joke. Will put it in safe dividend paying ETFs or whatever.
mopar28m
Rom. 3:31

User ID: 14265444
United States
08/17/2012 11:50 PM

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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

Fast forward 30 years, and the longer you have your money in the bank at today's rates, the more you lose.

My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?

I'm hoping somebody knows because this is something that has bothered me for years and I can't seem to find the answer.

Anyone?
 Quoting: JesseDart


With mortgage rates so low, savings account rates are even lower.

I remember those great savings rates & being taught it pays to save money.

I talked to a banker about the savings rate, telling them that the savings rate isn't keeping up with inflation but they told me that the fed sets the rate not them.
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Racin​g to end vaccinations.
JesseDart (OP)

User ID: 1596989
United States
08/17/2012 11:57 PM

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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

Fast forward 30 years, and the longer you have your money in the bank at today's rates, the more you lose.

My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?

I'm hoping somebody knows because this is something that has bothered me for years and I can't seem to find the answer.

Anyone?
 Quoting: JesseDart


With mortgage rates so low, savings account rates are even lower.

I remember those great savings rates & being taught it pays to save money.

I talked to a banker about the savings rate, telling them that the savings rate isn't keeping up with inflation but they told me that the fed sets the rate not them.
 Quoting: mopar28m


Maybe I'm confused, but even when interest rates hovered around 7%, savings accounts still paid like 2%. What changed that allows banks to borrow directly from the Federal Reserve at almost 0% instead of having to borrow the little guy's money and pay a decent amount of interest to us?

There is zero reason for banks to ever borrow money from anyone but the Federal Reserve, when did this change?
JesseDart (OP)

User ID: 1596989
United States
08/17/2012 11:59 PM

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Re: Savings accounts and the Fed
Thanks for the pin, hopefully we can get some good answers in here. This is something that has bugged me ever since I can remember.
TTX8K82

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United States
08/18/2012 12:00 AM
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Re: Savings accounts and the Fed



[link to www.youtube.com]
Anonymous Coward
User ID: 2926765
United States
08/18/2012 12:15 AM
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Re: Savings accounts and the Fed
silver pays better.....
Anonymous Coward
User ID: 22144922
United States
08/18/2012 12:18 AM
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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

Fast forward 30 years, and the longer you have your money in the bank at today's rates, the more you lose.

My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?

I'm hoping somebody knows because this is something that has bothered me for years and I can't seem to find the answer.

Anyone?
 Quoting: JesseDart


Because with $16 trillion in debt, the Fed has to keep interest rates artificially low or the interest payments on all that wasted buckage would run us into a quick bankruptcy.

Since there are few or no investors willing to literally lose money buying Treasuries, the fed has to print money and buy them for ourselves. That dilutes the value of our currency. So we have inflation and artificially low interest rates.

Welcome to currency manipulation and devaluation.
Anonymous Coward
User ID: 6685296
United States
08/18/2012 12:24 AM
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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

 Quoting: JesseDart


You misremember. You MIGHT have gotten 5% on an ordinary savings account then.

.
yeswecan

User ID: 19815370
United States
08/18/2012 12:25 AM
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Re: Savings accounts and the Fed
Thanks for the pin, hopefully we can get some good answers in here. This is something that has bugged me ever since I can remember.
 Quoting: JesseDart


so we'll invest our money in the markets, where it's much easier for them to steal, either way, stocks/commodities or t-bills, they are stealing what you worked to get, on their side, they created the money from thin air.

+ it helps that the rule of law is dead
resist we much!
Nikola Tesla
Reddy Kilowatt

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08/18/2012 12:25 AM

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Re: Savings accounts and the Fed
"Because with $16 trillion in debt, the Fed has to keep interest rates artificially low or the interest payments on all that wasted buckage would run us into a quick bankruptcy.

Since there are few or no investors willing to literally lose money buying Treasuries, the fed has to print money and buy them for ourselves. That dilutes the value of our currency. So we have inflation and artificially low interest rates.

Welcome to currency manipulation and devaluation".


Absolutely correct! The only way to prolong the inevitable collapse is to keep interest rates at or near zero. In the final analysis it won't matter, collapse will occur. However, it delays the bankruptcy.

“Courage is being scared to death, but saddling up anyway.” John Wayne
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08/18/2012 12:25 AM

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Re: Savings accounts and the Fed
This country (The US is a corporation) has been operating in bankruptcy since at least 1913.
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Anonymous Coward
User ID: 19470458
United States
08/18/2012 12:27 AM
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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

Fast forward 30 years, and the longer you have your money in the bank at today's rates, the more you lose.

My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?

I'm hoping somebody knows because this is something that has bothered me for years and I can't seem to find the answer.

Anyone?
 Quoting: JesseDart


Because with $16 trillion in debt, the Fed has to keep interest rates artificially low or the interest payments on all that wasted buckage would run us into a quick bankruptcy.

Since there are few or no investors willing to literally lose money buying Treasuries, the fed has to print money and buy them for ourselves. That dilutes the value of our currency. So we have inflation and artificially low interest rates.

Welcome to currency manipulation and devaluation.
 Quoting: Anonymous Coward 22144922


economic slavery.

People need to think and realize that there is not 16 trillion dollars in the entire world. How in the fuck are we supposed to pay it back? We can't...
MoonChildChazz

User ID: 22162237
United States
08/18/2012 12:37 AM

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Re: Savings accounts and the Fed
That was a different money world time it actually had more stable value back then.
Now it just valued off of debt loans & interest.

Stable CD dont even pay much right now.
Many now play the world stock market game in hope of quick high yield rollovers.
Chazz
Anonymous Coward
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United States
08/18/2012 12:46 AM
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Re: Savings accounts and the Fed
Finally, on August 15, 1971, President Richard M. Nixon announced that the United States would no longer redeem currency for gold. This was the final step in abandoning the gold standard.

[link to www.econlib.org]
Anonymous Coward
User ID: 22059129
Australia
08/18/2012 12:53 AM
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Re: Savings accounts and the Fed
You have to read up on monetary theory to solve the riddle.

Rate of interest doesn't matter once you understand the mechanics of the monetary system and there IS a way control the flow of money you spend but I will leave that up to you to find out.

Remember every you buy has to be financed somehow and you can do it without resorting to conventional means eg loan from bank, or dome other third party.
Anonymous Coward
User ID: 20022035
United States
08/18/2012 12:58 AM
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Re: Savings accounts and the Fed
...OK, to many kids slept during Econ 101...

The average annual inflation rate from 1900 to 1970 was approximately 2.5%. From 1970, however, the average rate hit about 6%, topping out at 13.3% by 1979. This period is also known for "stagflation", a phenomenon in which inflation and unemployment steadily increased, therefore leading to double-digit interest rates that rose to unprecedented levels (above 12% per year). The prime rate hit 21.5 in December 1980, the highest in history
[link to en.wikipedia.org]

..so when lending rates were HIGHER..savings rates were HIGHES...they paid you 7-8% and lent it out at 10-11%...today,borrow rates, for good credit folks, is below 4%..banks lend at 2-3% above inflation, approx., so low mortgage rates translates into low saving rates...I remember US treasurys at 12% !!!!! the most secure investment in the world paying 12%...and car loans were 22% and home loans were 18%...my lone denial was a home loan in 1979 in S Cal...18% interest..excellent credit and 2 good jobs...denied on a home loan....now you know why....
Anonymous Coward
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United States
08/18/2012 12:58 AM
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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

 Quoting: JesseDart


You misremember. You MIGHT have gotten 5% on an ordinary savings account then.

.
 Quoting: Anonymous Coward 6685296


I remember 8% for some reason also
Anonymous Coward
User ID: 1211208
United States
08/18/2012 12:59 AM
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Re: Savings accounts and the Fed
It's called CORPORATE GREED....

It's what got us where we are today....

It hasn't been fixed and it will be around forever


Enjoy making no interest on savings

Enojy paying high credit card interest...

Enjoy losing your 401k and other retirement money..

Enjoy your $7 an hour jobs...

Enjoy a lifetime of more of what we are experiencing right now?

How does it feel?

It's the new normal..
Anonymous Coward
User ID: 1211208
United States
08/18/2012 01:01 AM
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Re: Savings accounts and the Fed
Banks and Big Business and Liberals learned it's easier to fuck you out of your money than to lose theirs.. banana2
Anonymous Coward
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United States
08/18/2012 01:04 AM
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Re: Savings accounts and the Fed
I smell what The Rock is cooking.
Anonymous Coward
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United States
08/18/2012 01:05 AM
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Re: Savings accounts and the Fed
The credit unions still pay a good amount as long as you meet the requirements like direct deposit and 10 debit card transactions

Look it up
Stop using banks
Use credit unions
Anonymous Coward
User ID: 529006
United States
08/18/2012 01:06 AM
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Re: Savings accounts and the Fed
I got 8% on CD's in 1985 when my dad died. Million dollars at 8%. The good old days. Now I have 6% annuities. Not so good.
JesseDart (OP)

User ID: 1596989
United States
08/18/2012 01:11 AM

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Re: Savings accounts and the Fed
I smell what The Rock is cooking.
 Quoting: Anonymous Coward 1814245


cheers
JesseDart (OP)

User ID: 1596989
United States
08/18/2012 01:13 AM

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Re: Savings accounts and the Fed
Thanks for the enlightening posts, even if some of them started out with a condescending insult.

I guess my next question is, that IF and thats a big if, the economy recovers someday,

Will the banks continue to be able to borrow from the Federal Reserve for miniscule amounts of interest, or will they be forced to use deposited funds for loans resulting in a non-insulting amount of interest paid to depositors?
Anonymous Coward
User ID: 713727
United States
08/18/2012 01:16 AM
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Re: Savings accounts and the Fed
When I was a kid (70's) I remember having a savings account that actually paid pretty well. It was like 7-8% interest annually and we were taught by our parents that it paid to save your money.

Fast forward 30 years, and the longer you have your money in the bank at today's rates, the more you lose.

My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?

I'm hoping somebody knows because this is something that has bothered me for years and I can't seem to find the answer.

Anyone?
 Quoting: JesseDart


With mortgage rates so low, savings account rates are even lower.

I remember those great savings rates & being taught it pays to save money.

I talked to a banker about the savings rate, telling them that the savings rate isn't keeping up with inflation but they told me that the fed sets the rate not them.
 Quoting: mopar28m


Maybe I'm confused, but even when interest rates hovered around 7%, savings accounts still paid like 2%. What changed that allows banks to borrow directly from the Federal Reserve at almost 0% instead of having to borrow the little guy's money and pay a decent amount of interest to us?

There is zero reason for banks to ever borrow money from anyone but the Federal Reserve, when did this change?
 Quoting: JesseDart



Fear
Anonymous Coward
User ID: 7110254
Thailand
08/18/2012 01:22 AM
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Re: Savings accounts and the Fed
My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?
 Quoting: JesseDart


What? Are you fucking stupid? You think Congress has any control whatsoever over the Fed and "the banks?"

You have a lot of reading to do.
JesseDart (OP)

User ID: 1596989
United States
08/18/2012 01:29 AM

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Re: Savings accounts and the Fed
My question is this, what changed? Was legislation passed that allowed banks to borrow directly from the Federal Reserve at ridiculously low rates or something?
 Quoting: JesseDart


What? Are you fucking stupid? You think Congress has any control whatsoever over the Fed and "the banks?"

You have a lot of reading to do.
 Quoting: Anonymous Coward 7110254


Easy there tough guy. I'm no economist and am just asking questions. No need to be insulting.

What you doing in Thailand anyways? Renting ladyboys from the hills?
JesseDart (OP)

User ID: 1596989
United States
08/18/2012 01:31 AM

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Re: Savings accounts and the Fed
Anyways, while Congress may not be able to control the fed, they sure as hell can control banks. Do they have the balls to do it is the question.

Sadly, the answer is probably no.
MONSTER

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United States
08/18/2012 01:31 AM

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Re: Savings accounts and the Fed
I have had a savings for several years, not much just several thousand and come to think of it I havent had any interest added
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