• Pivotfarm
    07/27/2014 - 17:57
    There never seems to be a day that goes by without someone predicting that China is going to go down the Yangtze and end up some creek without a paddle.

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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Sat, 07/05/2014 - 19:08 | 4927519 rucunus
Sat, 07/05/2014 - 19:53 | 4927624 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

It's essentially the slow death of the middle class. Quite disturbing.

Sat, 07/05/2014 - 20:11 | 4927658 duo
duo's picture

A guy down the street from me is retired, and I think he has a few million in the bank.  5 years ago he was having contractors all over his house, bought a new car every two years, vacationed, pretty much lived it as he should for being successful.  He told me he doesn't do anything anymore but watch TV and burn through his grandkids inheritence.  No work for the contractors, except for the lawn guy.  Way to go Ben.

Sat, 07/05/2014 - 20:35 | 4927708 Grande Tetons
Grande Tetons's picture

My dad is like that....except for the few million in the bank part.

Vacation was car ride to visit old friends from back home. 

New car every two years was trade in 10 year old car for 8 year old car...with all them fucking gadgets. 

Contactor was have a guy come over and make this AC stop making a racket at night. 

Sat, 07/05/2014 - 21:29 | 4927874 Handful of Dust
Handful of Dust's picture

Ditto. Only very essential stuff gets done around here anymore. Zero elective work. I am really surprised how many of those $700k to $1.2 mill houses are sold when the property taxes have risen to over 3.2% in the last few years. Crazy stuff imo. Never seen anything like in before in my lifetime. Precarious. Very precarious. I see more Bailouts...many more Bailouts since no one is responsible for his own mistakes anymore.

Sun, 07/06/2014 - 00:03 | 4928202 J S Bach
J S Bach's picture

The "saver" is never dead... assuming the saver is disciplined enough to have held his savings until they are most readily tradable.  Of course, this moment is never known aforethought, so we can only hope thet our prescience is timely.

Sun, 07/06/2014 - 10:34 | 4928826 MontgomeryScott
MontgomeryScott's picture

Which one of the 'planks' is it, again? 'The abolition of privately-held property', or something.

There is another one talking about setting up a 'Central Bank' that enables the control of the money supply in order that the abolition of personal wealth can be achieved.

Enslavement can only be fully accomplished after the people are destitute and without the resources to survive by themselves, at which point they will BEG and GO FREELY in to their enslavement (if only to live another day).

The 'banks' don't give a shit about the imaginary construct called 'money', actually. It's only one tool in their arsenal. I find it incredible that there aren't more people who can't grasp the bigger reasons behind the 'ZIRP' and now 'NIRP' policies.

Tell the 'savers' in various nations who have been wiped out about how 'saving' is a good thing. Argentina, Weimar Germany, Greece, Zimbabwue,... coming soon to a nation near you...

NOTHING happens by 'chance'.

Sun, 07/06/2014 - 09:23 | 4928691 FredFlintstone
FredFlintstone's picture

Like my dad. Bought a silver anniversary Corvette convertible back in 2003. He and my mom bought matching leather bomber jackets, eating at Outback and Carrabba's so often that they intimately knew the managers. Were working with attorneys on trusts to protect their wealth. Not a worry in the world.

Fast forward 11 years: Corvette collecting duct in the garage, they just sold their winter home in Florida in this window of opportunity, bought an AR-15 and have silver in the gun safe. They be hunkerin' down. They don't need the protection of trusts anymore. I think they are a little worried. They don't have publuc pensions with COLAs, they rely on savings.

Sat, 07/05/2014 - 19:10 | 4927523 buzzsaw99
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.

Sat, 07/05/2014 - 21:14 | 4927819 jaxville
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.

Sun, 07/06/2014 - 05:47 | 4928494 The Most Intere...
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

Sat, 07/05/2014 - 19:21 | 4927548 Miffed Microbio...
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;-)

Sat, 07/05/2014 - 19:41 | 4927589 Grande Tetons
Grande Tetons's picture

Talk to your handlers.  Imagine.....

Miffed Tetons 2016 bumper stickers. 

 

Sat, 07/05/2014 - 20:05 | 4927644 Miffed Microbio...
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;-)

Sat, 07/05/2014 - 20:26 | 4927694 Grande Tetons
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.  

Sat, 07/05/2014 - 21:00 | 4927789 Miffed Microbio...
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;-)

Sat, 07/05/2014 - 21:14 | 4927820 Grande Tetons
Grande Tetons's picture

Compassion is the best stain remover. 

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

Sun, 07/06/2014 - 13:09 | 4929158 sylviasays
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. 


Sat, 07/05/2014 - 19:43 | 4927594 Greenskeeper_Carl
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.

Sat, 07/05/2014 - 21:15 | 4927821 Miffed Microbio...
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;-)

Sat, 07/05/2014 - 22:29 | 4928021 yogy999
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!! 

Sun, 07/06/2014 - 03:26 | 4928355 August
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.

Sun, 07/06/2014 - 09:14 | 4928681 FredFlintstone
FredFlintstone's picture

I hear ya and feel your pain bro.

Sun, 07/06/2014 - 20:47 | 4930257 NickVegas
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.

Sat, 07/05/2014 - 19:23 | 4927550 hidingfromhelis
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.

Sat, 07/05/2014 - 19:40 | 4927582 max2205
max2205's picture

Amen

Sat, 07/05/2014 - 20:12 | 4927660 buzzsaw99
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.

Sat, 07/05/2014 - 20:51 | 4927753 Cognitive Dissonance
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.

Sun, 07/06/2014 - 02:19 | 4928370 hidingfromhelis
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.  

Sun, 07/06/2014 - 08:07 | 4928595 Cognitive Dissonance
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.

Sat, 07/05/2014 - 19:25 | 4927555 Last of the Mid...
Last of the Middle Class's picture

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

Sat, 07/05/2014 - 19:26 | 4927557 divedivedive
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 ?

 

Sat, 07/05/2014 - 19:48 | 4927612 Greenskeeper_Carl
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.

Sat, 07/05/2014 - 20:34 | 4927715 DOGGONE
DOGGONE's picture

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

Sat, 07/05/2014 - 19:35 | 4927562 XRAYD
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 ...!

Sat, 07/05/2014 - 19:29 | 4927565 syntaxterror
syntaxterror's picture

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

Sat, 07/05/2014 - 19:46 | 4927605 centerline
centerline's picture

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

Sat, 07/05/2014 - 19:36 | 4927572 Joebloinvestor
Joebloinvestor's picture

The government has relinquished interest for printing.

Sat, 07/05/2014 - 19:51 | 4927618 TeethVillage88s
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.

Sun, 07/06/2014 - 11:52 | 4928999 MayIMommaDogFac...
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?

Sat, 07/05/2014 - 19:52 | 4927623 Seasmoke
Seasmoke's picture

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

 

Corrupt, stupid motherfuckers killed the golden goose. 

Sun, 07/06/2014 - 07:39 | 4928573 AdvancingTime
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....

 

Sat, 07/05/2014 - 19:53 | 4927625 seek
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.

Sat, 07/05/2014 - 20:47 | 4927747 DOGGONE
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!

Sat, 07/05/2014 - 19:57 | 4927631 ToNYC
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.

Sat, 07/05/2014 - 20:28 | 4927702 FredFlintstone
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.

Sat, 07/05/2014 - 20:38 | 4927724 RafterManFMJ
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.

Sat, 07/05/2014 - 20:51 | 4927759 Emergency Ward
Emergency Ward's picture

Does it show up on the DHS airport scanners?

Sat, 07/05/2014 - 20:01 | 4927635 I Write Code
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.

Sat, 07/05/2014 - 20:02 | 4927638 IridiumRebel
IridiumRebel's picture

Hail the New Abnormal!!!

Do NOT follow this link or you will be banned from the site!