Charting The Death Of The Saver

Tyler Durden's picture

Euthanasia of the rentier appears to be increasingly the modus operandi of the central planning caste of the world.

As we noted previously, Bernanke's (and now Yellen's) plan to exterminate savers is wholly unsustainable, The Fed's insistence that "our savers collectively have to hold all the assets of the economy and a strong economy produces much better returns in general" must be juxtaposed with comments from a money manager that "I don't think that's a fair-trade" for money intended to be invested safely."

 

 

By removing the last shred of hope for a rise in savings rates anytime soon, the Fed is once again creating the potential for major unintended consequences as the collapse in interest income for US savers from the 2008 peak forces them to extend duration (TSYs), lower quality (corporate bonds), and/or increase leverage/risk (equities).

No matter how hard they herd the masses, the elderly (and still working) respond, "At our age, we can't be a risk taker anymore."

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buzzsaw99's picture

NIRP, the Movie. Coming soon to a bank or credit union near you. The truth is they don't want your deposits.

jaxville's picture

  Almost all countries have eliminated reserve requirements for their banks since 2008. They don't need to have a pool of cash in order to lend money into existence.

   This policy will seem to work only as long as they can contain interest rates. We are only months away from the market forcing the issue (and higher rates). Initially they will rise very slowly but inertia will drive them to unimaginable heights very quickly.

  Central banks will make exuses for the higher rates but they will go along with them or face becoming irrelevant.

  Interesting times are upon us.

The Most Interesting Frog in the World's picture

I have to laugh all banks now have "wealth management" departments in their branches who's sole purpose is to funnel as much money as possible in to third party annuities where they make substantial commissions. Yep, that's a great use of a bank... Ufb

Miffed Microbiologist's picture

As former savers we have thrown in the towel. It is over. Any attempt to plan for any semblance of a retirement will be quickly overrun by inflation so why try? With ZIRP the die has been cast and we are the losers. The Fed is like the alien with its tentacle around the scientist's neck in Independence Day. Bill Paxton asks " what do you want us to do?" It's responds "Die". We are only useful as long as we can be milked though taxation.

Miffed;-)

Grande Tetons's picture

Talk to your handlers.  Imagine.....

Miffed Tetons 2016 bumper stickers. 

 

Miffed Microbiologist's picture

Agreed. However wouldn't a dictatorship be more effective at this point? I'd love to have the power to restore this country to a Republic and flush the dross. And when all was done, I'd be content to go back to my little farm and resume my quiet life. Funny, this was how the framers originally structured the government until the psychopaths infiltrated it and used it to achieve permanent power over others.

Miffed;-)

Grande Tetons's picture

As a microbiologist it would be your job to invent some sort of anti-sociopath spray that we would spread accross the nation.  I would do nothing...thus revitalizing the true function of the VP...the intelligence of Quayle coupled with the omnipotence of Biden.  

Miffed Microbiologist's picture

Very wise and thought out. However at this point in my career the only effective spray I could develop would be lethal on contact. Would this be satisfactory? I wish I could construct something more benevolent and nuanced that would change the hearts of those so bent. And I must develop an antidote for the innocent.

Only our wonderful government can come up with a term such as "surgical strike" when it is anything but. Hundreds of dead children are screaming from graves. Though we live in relative comfort and separate from this reality, there is blood on our hands that will never be washed away.

Miffed;-)

Grande Tetons's picture

Compassion is the best stain remover. 

Even gets out blood if you can remove the guilt first. 

sylviasays's picture

"However wouldn't a dictatorship be more effective at this point?"

Many think of Obama as a dictator at this point.  After all, he ignores the Constitution, selectively enforces laws, and makes up his own laws and rules by executive fiat. 


Greenskeeper_Carl's picture

"Bill Pullman"
But ya I feel your pain. That's why I advocate physical gold and silver. Im not really one of those who is convinced that its going to the moon anytime soon, or that it will replace fiat currencies any time soon, but it's real, it has no counterparty risk, and since 'buy and hold' doesn't and won't work with stocks long term anymore, I really don't know what the hell else to do. It's way undervalued right now, and can't suffer from a bail-in.

Miffed Microbiologist's picture

Thanks, I should have looked that up before I posted that. It's funny. Everyone I work with knows every actor/ actress and every movie or tv series where they have a role. The spend hours a day discussing it like sports fanatics comparing player statistics. It bores me to death and I simply don't understand the attraction. Then I try to bring up a topic discussed here. Their faces glaze over and it's their turn to be bored. It's as if we are in two separate worlds and light years of space between us. Forever apart. That goodness for ZH so I can find some connection.

Miffed;-)

yogy999's picture

You nailed it. Personally I've ben hammered by being on "the wrong side of the fence" in the 2000 and 2007 busts in-so-far as jobs go. Started a new job just before each bust and found myself unemployed/underemplyed for years after. Father of 3 and husband to a stay at home mom we,ve survived by my intolerance to any debt. That, and severe underconsumption let me to mathematically conclude that we could put together a future through compounding interest. Got burned in the 2000 crash, but knew what was coming in July of 2008 and hit the sell botton 12 times, (12 bokerage/401k.IRA etc) within 4 hours. I figured preservation of capital and "renting" it out would/could help us survive the coming years of unemplyment/underemplyment. (I'm in Airline Industry, pilot). Was hoping for deflation as in "cash is king" but Fed wouldn't have that. Just deny any value to all the vacations we never took, all the the DIY work I did for 2 decades, and genaral self-denile for over 2 decades. Cock suckers made that worthless with the stroke of the pen. What depresses me most is that I realize, (after years of financial repression),is that when extrapolated, folks like many of us are FUCKED. We refuse to participate in Ponzi's, but the penalty for not participating is sure "death". That they have made sure of. I know I'm totaly preaching to this audience but I must say that this audience has given me some sanity in an otherwise insane world. I very much appreciate this websight and just as much the great audience via posts which in total I have learned very much from, gotten many laughs, and in general, feel great being around a minority of folks who actually get it. Aside from MDB you are all welcome at my house anytime. Actually MDB is more than welcome becouse I have laughed more from (his?) posts.

 

Bottom line. I truely appreciate your post!! 

August's picture

>>>Was hoping for deflation as in "cash is king" but Fed wouldn't have that. Just deny any value to all the vacations we never took, all the the DIY work I did for 2 decades, and genaral self-denile for over 2 decades. Cock suckers made that worthless with the stroke of the pen.

Try not to think of your life and labours as being "worthless"; just think of past sacrifices as work put in for Jamie, Lloyd 'n' God Himself.

FredFlintstone's picture

I hear ya and feel your pain bro.

NickVegas's picture

Rightwous stuff, my man. The USA is a young country. It has become a pawn to the old powers in Europe and Asia, a useful idiot if you will. Slaves are not allowed to save.

hidingfromhelis's picture

Those who say, "At our age we can't be a risk taker anymore."  don't understand that simply holding dollars is also holding a risk asset.  Surprised one can even get a 3.9% CD nowadays too.  Of course that comes with a built-in loss of 6+% if real inflation is factored into the equation.  Must.............keep.........Ponzi.........going.

buzzsaw99's picture

reminds me of the broker who was telling an elderly client about a great investment opportunity. the client replied: sonny boy, i'm so old i don't even buy green bananas.

Cognitive Dissonance's picture

"Surprised one can even get a 3.9% CD nowadays too."

If you are referring to the chart above showing $390 of annual income on the six month $100,000 CD that works out to 0.39% on an annual basis, not 3.9%.

Just sayin'

3.9% would work out to $3,900 of annual income.

hidingfromhelis's picture

Busted for typing while distracted!  I was reading it as a $10,000 CD, which would make absolutely no sense on the chart where it showed the $5,000+ interest previously.  

Cognitive Dissonance's picture

If hyperinflation does actually show up when all those overseas dollars wash up on our shores, making $5,000 on a $10,000 CD might make sense when there is 5% inflation per week.

Last of the Middle Class's picture

if the banks go NIRP, Google wallet will take on a whole new meaning. 

divedivedive's picture

We are in our 60's and we are/were savers. Now we live in Mexico where we earn (pre-tax) about 3.5% on a CD. Recently we received notice from our US brokerage (of 29 years) that we can no longer invest in mutual funds but only ETFs and stocks. We are in money market accounts but even then they said - "money market accounts are not affected at the moment - but may be in the near future",

Man I'd love to see the Fed's playbook. Perhaps they are simply herding savers into stocks to unload their own portfolio ?

 

Greenskeeper_Carl's picture

They do make the libertad down there, which I've always thought was one of the best looking coins in the world. Cash some of that MM out and buy some while silver is still around 20/ounce.

DOGGONE's picture

Here's the truth, get it in everybody's face!
The Public Be Suckered
http://patrick.net/forum/?p=1230886

XRAYD's picture

The criminals and manipulators who run banks and wall street, also run the Central Bank. And they make the rules! Its how freedom and democracy, and free markets work these days!

The trick is quite simple really and relies on the FIRST magic words uttered by Sec. of State/Treasury James Baker before the first Gulf War to oust Saddam from Kuwait, when the negotiations in Geneva failed: "Jobs, Jobs, Jobs"! And that was the basis for that war. http://vvawai.org/archive/sw/sw41/10year-oilwar.html

(And, of course, the invasion of Iraq with fear mongering, and getting rid of Sec. of Treasury Paul O'Neil. ("From the very beginning, there was a conviction, that Saddam Hussein was a bad person and that he needed to go," says O'Neill, who adds that going after Saddam was topic "A" 10 days after the inauguration - eight months before Sept. 11. http://www.cbsnews.com/news/bush-sought-way-to-invade-iraq/)

 

 

And Americans salivate and understand everything is justified, and bend over. Well we know what kind of jobs are being created. And then, of course, there is that other kind of job ...!

syntaxterror's picture

The Era of Interest is over. It's that simple. 

centerline's picture

Welcome to the Era of Economic Cannibalism!  Middle class roasting nicely on the spit.

Joebloinvestor's picture

The government has relinquished interest for printing.

TeethVillage88s's picture

Let's look at the Total number of Banks first:

Inverse Curve, TBTF is Quickening, Like "Highlander"

http://research.stlouisfed.org/fred2/series/USNUM (total Banks) Commercial Banks in the U.S. 2014:Q1: 5,743 Number

5,743 total down from 14.400 Total in 1985 (wow)

I like charts:

http://research.stlouisfed.org/fred2/series/ROWFDN... ($3.16 Foreign Investment USA)
http://research.stlouisfed.org/fred2/series/GPDI ($2.69 Private Domestic Investment)
http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm
http://research.stlouisfed.org/fred2/series/GFDEGDQ188S (Total Debt as percent of GDP)
http://research.stlouisfed.org/fred2/series/GFDEBTN (Total Federal Debt $17.6 TN)
http://research.stlouisfed.org/fred2/series/CP (corporate profits, 1-1-2014)
http://research.stlouisfed.org/fred2/series/DIVIDEND

Corporate Taxes end of 2013 = 273.5 Billion (Treasury data end of Fiscal year Sept 2013)
Corporate Profit end of 2013 = $1.9045 Trillion

$273.5/1,904,5 = 14.4% Corporate Tax

http://research.stlouisfed.org/fred2/series/BKFTTLA641N (all institution failures)
http://research.stlouisfed.org/fred2/series/USNUM (total Banks)
http://research.stlouisfed.org/fred2/series/MEHOINUSA672N (Median household income, what? discontinued?)
http://research.stlouisfed.org/fred2/series/PSAVE (Personal savings)
http://research.stlouisfed.org/fred2/series/TRP6001A027NBEA (SNAP Payments, 1-1-2012)
http://research.stlouisfed.org/fred2/series/GINIALLRH (Gini Ratio/Coefficient, what? discontinued?)

Probably should have more charts for People and the Quality of Life of People...But the Truth is Debt is Exponential, Compensation is Down, Jobs have been lost, Medical Costs are up, Pensions are under funded, ...Social Security is under funded and being attacked, Medicare is under funded, Costs are Exponentially Increasing, no on cares about cost, and is being attacked. And the Funding for VA Admin went up (only doubled since 2001 for Medical) despite two wars and Tripling of funding increases for the whole agency.

http://research.stlouisfed.org/fred2/series/BKIFDCA641N (FDIC Failures)
http://research.stlouisfed.org/fred2/series/BKIRTCA641N (RTC Failures thou terminated data didn't propagate)
http://research.stlouisfed.org/fred2/series/BKFTTLA641N (all institution failures)
http://research.stlouisfed.org/fred2/series/USNUM (total Banks)

Oligopoly. Anti-Trust. Control over the Free People. Intrusive governance by Private Corporations.

MayIMommaDogFace2theBananaPatch's picture

>> what? discontinued?

That's very interesting.  

Do they attempt to provide any 'explanation' at all -- or are they just hoping that folks don't notice the dataset does not cover dates past 2012?

Seasmoke's picture

Why would anyone hand over 100k for $400 in a year!!!

 

Corrupt, stupid motherfuckers killed the golden goose. 

AdvancingTime's picture

I contend the primary reason that inflation has not raised its ugly head or become a major economic issue is because we are pouring such a large  percentage of wealth into intangible products or goods. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply.

The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas.

 It is important to remember that debts can go unpaid and promises be left unfilled. If this happens where does it  leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years.  More in the article below.

http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....

 

seek's picture

Unintended consequences indeed.

Anyone who's sane realizes that there are systemic risks with the current financial system.

They also realize that the current return (especially real return) in the current system is zero or negative.

Ergo, risk management says pull your assets out of the system.

Those same older savers aren't stupid. In the past year, my accountant, who knows I'm well versed in the mechanics of acquiring PMs, has referred a number of his clients to me to walk them through the process of converting USD to physical. No idea if they ever follow through, but they're asking the question, and every single one of them came to the all risk/no reward, time to look elsewhere conclusion independently and then sought professional advice.

The Fed is driving savers out of the system. And as we know, this doesn't end well.

DOGGONE's picture

Do these look like rational price histories?
http://www.showrealhist.com/RD_RJShomes_PSav.html
Damn right!
SO, get charts in people's faces NOW, to end the deception by omission -- AND undermine shafting the savers!

ToNYC's picture

Invest in yourself  or the cash melts; longing for the return of banking as we knew it in the 20th Century is as dead as precious metal backing the currency. Get over it and get going, not whining.

FredFlintstone's picture

Do you mean LASIK surgery, Botox and a facelift for the guys, plus a tummy tuck and breast implants for the ladies?

Actually my eyesight is getting worse and I was thinking of getting LASIK instead of glasses with the idea that my savings will be worthless soon anyhow. Might as well get something I can benefit from.

RafterManFMJ's picture

I had a Glock grafted to the side of my skull last fall. With a toupee on, my head simply looks freakishly misshapen, which has a deterrent value of its own.

Emergency Ward's picture

Does it show up on the DHS airport scanners?

I Write Code's picture

This isn't a fair story, you really don't want to encourage ma and pa to put new money into long bonds at 3% when "everybody knows" they will shortly return to 6%.

The question then is, is it better to put them into PG at 3% yield but also 6% total return instead, when that too will be hurt if rates bounce back to normal?  The answer is ambiguous until you also consider the inflationary aspect of ZIRP and QE, assuming PG as a productive asset is more or less insulated against inflation and bonds are not and again "everybody knows" the Fed wants to ignite just a little more inflation as part of their grand plans.

And this is exactly what has happened for the most part over the past five years, a lot of "savings" has gone into the dullest, safest dividend-paying stocks, following the Fed's directives.  If ZIRP was ever a good idea, then this was a necessary move. So, was ZIRP ever a good idea?  Probably not, but for better or worse that's what they did.

But you can still be a "saver" and invest conservatively in equities and the total risk is not all that different from CDs, and in fact there is an upside chance, and anyone who rolled it into equities promptly in 2008 and 2009 is now quite happy that they did.

IridiumRebel's picture

Hail the New Abnormal!!!

BlackMagician's picture

For me in this financial atmosphere it isn't return on investments...it's return of investiments...

hooligan2009's picture

exactly right...draw down your capital to live on when you no longer need to work. 

trouble is, if everyone does actually want their money back in this way, there isn't sufficient uncollateralized capital available.

hence someone better do soemthing about tax advantaging inherited wealth pretty damend quick.

q99x2's picture

Heck with savin. We have Yellen printing. Party on bitchez.

hooligan2009's picture

most excellent perspective... 

ZIRP here (and NIRP in Europe) is a direct attack on ethe elederly and infirm who have already accumulatede capital and cannot afford the risk of volatile equity markets prior to their deaths. 

it is this policital manouvering and shenanigans that a central bank cannot help but engage in when it engages any kind of rate mainpulation.

politics is about the transfer of wealth from one sector to another, now that the fraud being perpetrated on the general populace by the banking system has been exposed, the Fed is unwittingly or not, reducing the wealth of those with money (who demographically older people who have saved money) in favor of those who borrow to live beyond their means either from the government (welfare beneficiaries) or from banks (those who are duped into borrowing money for cars, credit cards payday and student loans amongst other things) with punitively high interest rates.

make no mistake, the Fed is an arm of the government that is engaged in politics without any representation from the people it is taxing. modern fiscal and monetary policy are two sided of the same coin whenever creating money out of thin air is concerned (either via fiscal deficits or money printing).

monetary policy cannot affect GDP growth or unemployment. inflation is a profit phenomenom that cannot be substituted with central bank monetary printing.

Save_America1st's picture

But can they exterminate a stacker?

JR's picture

Socialism is plunder; it converts plunder into a right; it perverts the law to protect plunder.

“Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.”

What Frederic Bastiat wrote more than 150 years ago applies perfectly today: “The law is perverted. And the police powers of the state perverted along with it! ... The law became the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish!”

A central authority in America today, the Fed in partnership with the federal government, now decides what private property is to be taken – without risk –  exploiting the person, liberty, and property of one group in America while giving it to another. At the same time, GovFed “has converted lawful defense into a crime, in order to punish lawful defense.”

The Federal Reserve, owned by private bankers and using the law, is taking the hard-earned money from retired Americans and savers and transferring it, not even for economic advantage, but to their own bank accounts. And as savers become poorer and poorer, these international bankers and their voting bloc enablers have become rich and richer beyond any vulgar measure.

Professing a democratic ideology, these elite insiders use the enfranchisement of open-border Third World immigrants as a voting bloc to disenfranchise native Americans, voting themselves and the U.S. Treasury America's property. The ultimate aim of this ruling order is destruction of the U.S. and its middle class, to be merged eventually into a one-world World State over which they will have global control.

Ever wonder why George Soros and many of the richest men in the world are financing Communist revolutions and Socialist legislation in the US and the EU, i.e., democracy? It is to manipulate man’s basest appetite – greed -  as a mechanism for ruling-class control. Hans Herman-Hoppe explains “democracy,” i.e., the “will of the people” by majority rule:

“Imagine a world government, democratically elected according to the principle of one-man-one-vote on a worldwide scale. What would the probable outcome of an election be? Most likely, we would get a Chinese-Indian coalition government. And what would this government most likely decide to do in order to satisfy its supporters and be re-elected? The government would probably find that the so-called Western world had far too much wealth and the rest of the world, in particular China and India, had far too little, and hence, that a systematic wealth and income distribution would be called for.”  (Herman-Hoppe, Democracy: The God That Failed)

More than 150 years ago when France was rapidly turning to complete socialism, Bastiat wrote:

Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.

“But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.

“Now since man is naturally inclined to avoid pain—and since labor is pain in itself—it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.

“When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.”

To end the plunder, we must end the Fed – the core source of the new world order.

yogy999's picture

Great post. Read "The Law" a couple of times and passed it out 100's of times. Kudos to you!!