Letter to the Editor: Get it going

Low interest rate poses a Catch-22 situation.

Hundreds of billions of dollars are currently being hoarded away in CDs and savings accounts across the nation. The owners of these assets are the baby boomers who, because of their age, are not in a position to gamble in the stock market. The funds in these no-interest accounts are safe but are doing nothing to help the economy.

The federal government, in an effort to save Wall Street, has in essence placed one of the greatest taxes in American history on anyone with money in the bank. Imagine what would happen if the banks were forced to pay fair interest rates. The interest income from this treasure trove would flow back into the economy almost immediately. This renewed flow if spendable cash would create demand and spur real job development.

The federal government has given the banks and Wall Street a free ride on the backs of anyone who was smart enough to save rather than gamble on the stock market.

The banks have and still are sitting on this money, refusing to use it for business and housing development as intended.

It is time to end the “no-interest tax” and get this stolen money back into the hands of people who will spend it and end the recession.

Tony Costa

Marco Island

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Comments » 1

WhiskeyTangoFoxtrot writes:

Not only that but pension funds rely on a return on investments in bonds. Current rates will destroy these funds. Calpers, the largest private pension fund earned a 1% return last year. The fund managers had predicted a 7.5% return. Some real geniuses there!

Unfortunately rates will never be allowed to rise by the Fed or .gov. Why, because there is no real capital being reinvested. Business is being funded with debt. If these corporations are forced to role existing debt at higher rates they are toast. This is deflationary and the Bernanke will never let that happen.

Then there is the $16 trillion in national debt. If rates go back to 6% or 7% the country is toast. See Spain, Greece, Italy, etc. The Spaniards are crying due to 7%. This game will be played until it can't. When bond holders begin to lose confidence and demand higher yield the game will end. How much longer can the game continue? That is the $16 trillion (and rising) question!

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