MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
How much interest do you get on a regular savings account from a "bank to big to fail", such as Citibank?
In general, you'll get 0.01 % as listed at Money-rates.com.(See "Popular Banks" section and also Citibank standard savings account rate disclosure.)
You read that right, 0.01%. So if you have a $1000 in your savings account, you will receive basically 10 cents in interest over the course of a year. Meanwhile, a bank like Citibank is lending your money out in many ways, including its credit card division at rates up into the double digits (up to 29.99 % if you make a late payment).
But the real injustice here is that while Congress and the White House are talking about cutting back Social Security, seniors who are lucky enough to have savings are earning, in essence, no interest if they have some savings tucked in a bank account.
I was digging through some old papers recently and found a June 23, 1995, advertisement from then StPaul Federal Bank in Chicago. It offered 5.65% on a four-month CD. Right now Citibank is offering 0.20% on a one-year CD (minimum deposits apply to most CD offers).
In short, while the stock market is flying and those who are rich are seeing their portfolios swell with money, working stiff seniors are facing decreased payments on their earned benefits and are basically losing money in savings because inflation is outpacing virtually no interest being paid to them.
Here is a little bit of history about federal interest rates, which are the basis for bank interest to depositors:
The benchmark interest rate in the United States was last recorded at 0.25 percent. Interest Rate in the United States is reported by the Federal Reserve. Historically, from 1971 until 2013, the United States Interest Rate averaged 6.17 Percent reaching an all time high of 20 Percent in March of 1980 and a record low of 0.25 Percent in December of 2008. In the United States, the authority for interest rate decisions is divided between the Board of Governors of the Federal Reserve (Board) and the Federal Open Market Committee (FOMC). The Board decides on changes in discount rates after recommendations submitted by one or more of the regional Federal Reserve Banks. The FOMC decides on open market operations, including the desired levels of central bank money or the desired federal funds market rate.
Meanwhile, the stock market is crossing back and forth into record territory with bulging increases in portfolio value for the wealthy and record dividends.
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In September of last year we penned a commentary entitled, "A Tale of Two Economies: Skyrocketing Stock Market for the Rich, Devaluation of Work for the Rest" in which we wrote:
The rich are making out like bandits in the booming Wall Street economy that is based on profits squeezed out of firing workers, lowering net wages (adjusted for inflation), and outsourcing jobs to exploited labor overseas. There is no crisis in the top 1%; there is only increasing wealth.
In that second economy, the financial returns are rising like a high tide. The rich are not living in a recession; they are living in a gilded-age-bubble of increased profits and assets.If it is true that the richest 400 people in the US own more wealth than the bottom 185 million, that imbalance is increasing, not decreasing.That is the story of the tale of two economies, the story that you don't read about in the mass corporate media – but it is the financial reality of our times.
The continual cries of "austerity" by the wealthy integrally relate to this tale of two economies, because there is no austerity being imposed on the wealthy: it's like the 1920's all over again for them.
However, seniors and the working class are being squeezed by cuts in benefits, pay, and the inability to earn interest of any meaningful size on money that they saved for retirement.For most Americans, they have been living in austerity for years now.
It's time to see some austerity imposed upon the 1 percent.
Far too many of the rest of us are already "austeritied" to rationing for survival.