Where are savings accounts?
Út 03 února 2015
(my comment on the EconTalk show on banking)
I am afraid the reason is that we don’t have that much choices.
Which leads me to the issue which I am quite surprised nobody discusses at all (what am I missing?). As I understand the dim archaic past of something like thirty years ago, in a civilized country then (in that time I was growing up in the Communist Czechoslovakia, so no civilization for me), people took their excess money to their local bank and they got some reasonable interest on it. What I do remember is that when I was moving for our PhD studies to States in the year 2000 we got in the university FCU something like 4% p.a. on the savings account. Then the Internet Bubble burst, and of course rates went down to around 1% p.a., so I stopped bothering with savings account and I had to start to invest somewhere else. Meanwhile, we didn't have enough money so investing stopped being interesting to me at all. However, looking around me now, I don't see much change from those around-1%-pa times. Still the same FCU has today on 18month certificate rate 0.8% p.a. which kind of doesn’t make any sense to use.
Is it just me, but this is all result of politicians (BOTH Republicans and Democrats) swindling their way out of the economical situation by robbing not only future (by creating incredible loans ... look at Greece to see where we are heading globally, IMHO) but also by stealing all savings by keeping the interest rate artificially low. It is funny to hear all those bankers to cry out for more loans, when they keep interest rate at 0%! Who in the world would loan a money, when a) they have none in the bank (because nobody saves anything), and b) the interest is so tiny, that it doesn't make much sense to loan.
Am I completely wrong, or it is a big white elephant in the room which is constantly overlooked by everybody? Is there some show on EconTalk about this issue?
Am I right thinking that Mr. Greenspan, Bernanke, and Ms. Yellen wiped out consumer banking and small people savings? Why should I invest on the market myself? I would rather handed my money down to some specialist who would do it better than me (considering, I would get some reasonable interest back)?
What would actually happen if the central banks of whole world stopped meddling with the interest rate and let it stay at some higher level? Of course, the first reaction would be radical crash of the market, but if you stayed on this normal interest rate for longer time, wouldn't the market accommodate and result would be a bit more healthy in total?