I read this Piece from Tyler Cowen, and affix on the problem I have long seen in American society. It is basically a problem of changing the Rules of the Game for all of the Incomes below the top 20%. I call it the destruction of alternate means of Saving. It is the Federal Reserve who is the apparent enemy in this fiasco, though the real culprits are the Top Earners in the Country, who apply constant pressure to Fed policy. Bankers go along with the practice heartily, because they make far more Money in Shadow Banking than they do in ordinary Banking.
Here is a Statement of the Problem: Fed monetary policy is consistently utilized to ensure all actual Bank Deposits will lose Money, because the Interest rates paid by Banks will always remain below the Inflation rate. The traditional manner of Saving used by lower Incomes has been destroyed by this mechanism, leaving such Incomes to lose Money by Saving, or investment in instrumental means which they do not readily understand; and which, by the way, are under the total control of the Top Earners in the American economy. The interesting thing here is that these Top Earners possess both the power to determine what these forms of investment will charge the Investor, and their own Pay for handling these investment organizations. The federal government insists that Banking abandon its traditional role of being the investment vehicle of the Poor, forcing lower Incomes to channel their Savings through the financial flow of the Top Earners to the benefit of the Top Earners, while Investment return is pushed as marginally low as possible for all Investors.
There is a Solution to this chicanery: Passage of a federal law or mandate which insists that all Savings deposits at Banks must receive at least 4% Interest on all deposits made; or 2% higher than the Inflation rate determined by the CPI, whichever is higher. The law should also stipulate that Demand Deposit get at least 2% Interest on deposits, or an Interest rate equal to the Inflation rate, whichever is higher. The federal government should not be in the business of pressuring low Incomes to invest in Instruments which they do not understand, or should they be establishing economy policy which benefits only one segment of the economy; especially when this Income class already has too much deferment paid to their antics. lgl