America’s debt load is the highest it’s been since the post-WWII era. Look at the interest costs to carry all that debt in the chart below, and imagine you had such a personal debt load. Wouldn’t you want to reduce it? Of course, you would.
Now, throw in the fact that the government can print its own money, create it out of thin air, and set its own interest rate level, and it’s obvious it benefits from lower rates. It kicks the can down the road for politicians to pretend they’re serious, and yet they do nothing about it. Look at the debt being accumulated.
A gold standard would be an immediate fix to manipulated monetary policy, but when you’re the government, you know that 12 inches make a foot, but such rules don’t apply to you. The yellow metal tells the truth about rule breakers.
Most of you know what it’s like to carry a mortgage, and many remember when rates were way higher than today. Your goal was to own your home simply to get the bank off your back. Now that most mortgages have been refinanced like the limbo—how low can you go?—the lobby to boost the real estate market is fierce. I’ll put it right up there with Wall Street.
There was a time when a loved one would bring a child to the local bank, like our father did for my sister and me, and help them open a savings account. My dad knew seeing interest on interest was the quickest way to teach us about compound interest without spending a minute in the classroom. Now, the game is trading whatever might go up in value today. It’s a price dependent gamble, not an interest-bearing plan.
By lowering rates, the Fed is throwing gas on the flames. It is destroying a tried-and-true savings plan to live by and replacing it with nothing worthwhile. We do not know what the consequences will be…yet.
Action Line: As Your Survival Guy, my goal is to help you avoid disaster, especially manmade ones, which are most often the most painful and avoidable ones. When you’re ready to talk about your savings, let’s talk. But only if you’re serious.
Originally posted on Your Survival Guy.
