Number of the Week: Americans Dipping Into Savings - Real Time Economics - WSJ

Mixed messages from the government regarding the need for people to save. The question has arisen whether or not the Fed is making it impossible for people to save by keeping interest rates near zero. Sitting on your money right now in a savings account will probably prove to be a negative return once inflation is calculated properly. Banks have the ability to make money because they are getting money at near zero percent so anything they make above that is gravy. However, the individual trying to save part of their weekly paycheck would be as likely to get return on their funds if it was held under their mattress. Putting it under the mattress might even make more sense with the way the economy has been manipulated. Two parts of the American Dream have been completely wiped out recently. Of course these are the two driving forces that allowed people to get a return on capital at low risk and to actually compound interest on money over time. Now we have been pillaged by the banks and the government. The two ways to get ahead for the little guy: buy a home, let your saving compound over time. Both taken away but the powers that be while they keep saying people need to save more. For What? So the banks can lend out money at 4 or 5 % and make a killing with customer funds? This is a backhanded way to prop up the banks again. Save more money so the banks have more capital to use to improve their bottom line and appear solvent. Number of the Week: Americans Dipping Into Savings - Real Time Economics - WSJ: "To some extent, people are acting exactly as policy makers want, at least in the short term. By holding interest rates near zero, the Fed is creating an incentive to spend rather than save — or to “save” in a different way by paying down expensive debt. With three-month certificates of deposit offering annualized interest of less than 0.3%, using available cash to pay off a credit card that charges 30% or a mortgage that costs 5% makes a lot of sense. Over the two years ending September 2010, U.S. consumers — largely through defaults, but also through pay-downs — shaved nearly a billion dollars off their mortgage and other debts, a shift that could make them less sensitive to credit freezes like the one we just suffered." Neatdesk Deals Direct