In The U.S. The Cruelest Tax Of All
posted with permission from:
http://sane-ramblings.blogspot.com/2011/07/in-us-cruelest-tax-of-all.htmlAs the U.S. government sinks in its mushrooming debts and debates the extension of the tax benefits for its wealthiest citizens, there is not a word spoken about the cruelest tax of all, the one committed against its retirees and its other savers.
That tax came into being in 2008-09 and it was done with no debate, as it was quietly instituted by the U.S. Fed. It is the arbitrary and vicious suppression of interest rates on savings, so that the banking industry can rebuild its balance sheets after its self-induced wild ride on real estate and other ill-conceived ventures. First and foremost among those banks are the already bailed out "too big to fail" banks.
While retirees and other savers receive virtually nothing in interest on their money, forcing many of them to live even more frugally than they otherwise would, after a lifetime or much of a lifetime of hard work, their is no end in sight to this undeclared tax, a continuation of the bailouts.
Yet at the end of May, 2011 the Consumer Price Index (CPI) had jumped 4.12% from May, 2010 meaning the purchasing power for retirees and other savers declined sharply. While at the same time, the cash strapped federal and state governments did not collect taxes on savings profits they otherwise would have gotten, for even not counting the CPI, "profits" amounted to relatively little.
But the giant banks have profited immensely and are paying out those profits in top management bonuses and dividends. While at the same time, not providing the liquidity to small business, low rates to consumer borrowers or forgiveness's to troubled and often out of work homeowners the Fed had hoped for.
This is Robin Hood in reverse. It is a transfer of wealth from retirees and other savers to enrich those with some of the deepest pockets. Recently, I listened to a lovely 96 year old widowed woman speak of the very small savings check she now receives and I thought of the Bank of America, Citibank, JP Morgan Chase and other giant banks that profit at her expense. It is unconscionable but readily correctable by the Fed if enough of us raise our voices.
For additional investment insight, please see "Today, Safe Investments Don't Keep Up With Inflation," by Scott Burns.
http://assetbuilder.com/blogs/scott_burns/archive/2011/06/29/today-safe-investments-don-t-keep-up-with-inflation.aspx
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