The central bank war on savers is rooted in a monumental case of the Big Lie. Here is what a retired worker who managed to save $5,000 per year over a 40 year’s lifetime of toil and sweat in a steel factory now earns in daily interest on a bank CD. To wit, a single cup of cappuccino.
Yet the central bankers claim they have absolutely nothing to do with this flaming economic injustice.
That’s right. A return that amounts to one Starbucks cappuccino per day on a $200,000 nest egg is purportedly not the result of massive central bank intrusion in financial markets and pegging interest rates at the zero bound; it’s owing to is a global ‘savings glut’ and low economic growth.
Thus, Mario Draghi insisted recently that ultra loose monetary policy and NIRP are,
……… ‘not the problem, but a symptom of an underlying problem’ caused by a’global excess of savings’ and a lack of appetite for investment…… This excess – dubbed as the ‘global savings glut’ by Ben Bernanke, former US Federal Reserve chairman – lay behind a historical decline in interest rates in recent decades, the ECB president said.
Nor did Draghi even bother to blame it soley on the allegedly savings-obsessed Chinese girls working for 12 hours per day in the Foxcon factories assembling iPhones. Said Europe’s mad money printer:
This post was published at David Stockmans Contra Corner by David Stockman ‘ May 3, 2016.
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