Home > Uncategorized > ‘Why Saving is for Suckers’

‘Why Saving is for Suckers’

http://articles.moneycentral.msn.com/learn-how-to-invest/why-saving-is-for-suckers.aspx?page=1

‘Your bank, with the help from Uncle Sam, is making obscene profits at your expense.’  If any of you are stashing money into a savings account maybe for a house, emergency funds, etc. sounds legitimate? Well  you may want to think twice.  The article flat out tells us how our money is being used as a ‘vehicle’ to fund the big guys into making bad decisions once again.  When you deposit your savings, it is lent to the bank at about a rate of one percent, which in turn is lent to the government for a rate of about four percent, and then lent to big companies at a rate of about six percent and even eight percent to smaller companies.  Starting to sound unfair right?

It gets better.  You aren’t the only one.  The difference between the money you receive on interest and what the banks earn is called a ‘spread.’  The spread right now is so large that banks are earning HUGE profits (so much, that they are trying to hide profits, not losses as many of us are led to believe)  off of your saved money and one percent return.

This isn’t even the worse part. ‘As banks cut back on loans to everyone (2009), companies then turn to the bond market for cheap funding. Banks don’t mind, because they are fattening up by borrowing cheaply from the public, which has been stampeded and scared into stowing income in savings accounts. The Federal Reserve eventually raises interest rates, killing the value of the carry trade (late 2010). Only then do banks start to make commercial and industrial loans, then loans to the public. Banks ultimately become more competitive with each other and the bond market and then start to go crazy again, issuing loans to any business or individual with a pulse, and that’s when the credit cycle really goes nuts again (2011 to 2012).’

Hard to believe that our personal savings accounts could possibly be a ‘vehicle’ that leads to another credit crisis in the future (predictors think 2012.)  After reading this, do you really think the banks are taking a step in the right direction, or are we just moving backward?  It seems to me we are just repeating old mistakes, and not learning from them.  What can the banks and government do that will actually help the economy as a whole and not just the ‘fat cats’ that sit on interest?

Just a heads up, the article allocates many possible options en rerouting your savings.

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Categories: Uncategorized
  1. yardieboy88
    November 8, 2009 at 2:55 pm

    Really? This is really interesting and I will continue to follow this over the coming months to see how it develops.

    The thing with this situation is we cant help but go to the banks and we cant help but invest our money.
    Whats better to invest your money (or save your money) at 1 percent or to let it sit under the mattress and depreciate due to inflation?

    I personally will take the 1 percent even though inflation is about 3 percent per year and that still leaves my money in the hole 2 percent.

    The banks and investors are the ones who need to start to manage this situation better. there is nothing we can do. we have to invest and save

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