Clandestine Forms of Taxation
If you think low interest rates are heaven sent, they are… for borrowers. Like the U.S. government, among others.
For savers, it isn’t so heavenly. From Ira Stoll at Reason.com:
…low interest rates mean whatever money is left in the bank is generating less interest — to be precise about it, $384.5 billion less interest in 2011 than 2008.
Now, if President Obama or Congress announced that they were going to raise taxes in a way that would take $384.5 billion a year out of American pockets, there would be a huge uproar about it. It would be the lead story on the evening news and there would be 30-second political commercials about it. With zirp, on the other hand, you might see some complaints from Ron Paul, from the Wall Street Journal editorial page, or from a few congenitally cantankerous hedge fund managers, but otherwise, the silence has been deafening.
Mr. Obama has even tried to make a virtue of it. At his press conference last week, he said, “Congress should pass my proposal to give every responsible homeowner a chance to save an average of $3,000 a year by refinancing their mortgage at historically low rates….That would make a huge difference for millions of American families.”
The Shakespearian lesson made modern:
Neither a saver nor investor be;
For savings oft loses both itself and interest to inflation,
And Buffett-style investing demands one’s very soul.