The unfair tax that punishes wealth builders

I hear a lot of talk about how a federal government default would mean higher interest rates, and I have to tell you, in one respect, I’m not sure that would be a bad thing.

OK, it would be. Default, I mean. A horrible blow. The nation’s credit rating would suffer, the international economy could tank.

But on the other hand, default would man higher interest rates, and higher interest rates would help a very large segment of the economy.

The GOP folk hate the idea of raising taxes to close the deficit gap, claiming taxes are “job killers.”

But there is an invisible tax levied on everyone in the nation with a savings account. This tax is sucking billions out of the economy, killing millions of jobs.

I’m talking about interest rates.

Have you seen what your average savings account pays for interest these days? Maybe half of one percent, if you are lucky. A five-year CD may get you a bit more, up to one percent or (luxury!) 1.5, but even that’s a pittance.

This has a direct impact on retirees, of which we have a lot. If we don’t want to see increasing demands for Social Security increases, something must be done to raise interest rates.

It’s simple. Retirees live off of invested money. They could spend their principal, but that runs the risk of running out before they die. If they have enough savings, and interest rates good, they can live comfortably and independently.

But with interest rates so horrible, someone with half a million in the bank — a figure on the low end of an adequately funded retirement plan — is still getting diddly. That means retirees have less to spend at the store, which means the stores make less money, which means the stores hire fewer people. Some are having to call back on their children for help.

Inflation is at near zero — officially, but seniors are bearing the brunt of medical cost increases, gasoline increases and food increases because, on their low incomes, that’s pretty much all they buy. With their income fixed at what Social Security will pay — and SS follows the cost of living index for everyone, not just seniors — plus at the tiny amount their investments pay, they’re stuck.

Who benefits from all this?

You know: banks. Not having to pay interest is a huge financial gift to them. Getting use of other people’s money for free makes life very good for them.

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5 Responses to The unfair tax that punishes wealth builders

  1. Bob Becker says:

    Rising interest rates often accompany a broader inflation across the economy. And inflation hurts especially anyone, including retirees, on entirely fixed incomes [like pensions, or annuities which are not inflation-indexed.] Many retirees do exist on fixed incomes — a pension, say, often quite small [under $300/month] plus some social security. They do not have retirement savings of six figure multiples in interest-drawing bank accounts or anywhere else. Yes, higher interest rates would be nice for those owning such accounts, and would encourage more savings — you’re right about that —- but an accompanying inflation in general prices [including food, clothes, gas, and much else] would be financially disastrous for those no longer working who are just… just… making it now.

    And low interest rates are not a “tax” on those who do have savings accounts. Makes no more sense I think to call them that than it did for President Reagan [after he realized what his tax cuts were doing to federal revenues, and he figured out that the Laffer Curve he'd been sold as a justification for them was nonsense] to call the new taxes he demanded to lower his ballooning deficit “revenue enhancements” but not taxes.

  2. Howard Ratcliffe says:

    “Permit me to issue and control a nation’s money supply and I care not who makes its laws” Mayer Rothschild.
    The Federal Reserve has no Reserves; it prints money and charges interest in the Notes ensuring there is never enough money in circulation to cover the debt.
    The FED has nothing to do with the Federal Government; it is the US branch of the Bank of International Settlements and World Bank created 120 years ago by the Rothschild family who put its sons at the helm of FED’s in Spain, Italy, England, France and the then very powerful Austria.
    The outcome of this “Pyramid Scheme” is now at hand and most of the world knows it; Pyramid means “Amid the Flames”; many of us will be using Benjamins as Germans used Marks as Wallpaper, except this time many Americans have no home to wallpaper. The Mortgage (Death Pledge) Holders will use their Military “Collection Agencies” to recover what assets remain; the ones Americans are never told of which sit in the ground in the form of a Trillion+ barrels of $100/Bbl Oil.
    Quite a scam really, perpetuated by traitorous Presidents too spineless to speak up about it.

  3. kent coleman says:

    Charles;

    Please watch the short 14 minute vidio on youtube called “Michael Hudson: GOP cries wolf” on Democracy Now with Amy Goodman.

    Professor Hudson explains what Obama is doing and why.

    Obama is making the debt crisis into something it is not, and using it to steal social security and medicare and give to wallstreet.

    It is wallstreet who owns us and Obama

    I voted for him like many suckers, even though a vote in utah for Obama was mostly symbolic.

  4. NO stocks 4 me says:

    I agree with you Charles, the only one close to topic was the first poster.

    I’m between a rock here, I also would like to see gen bernakapart over ruled, but…. I’m also on SS and military retired so I may get better rates (maybe) , but would see my other income parts hosed.

  5. NO stocks 4 me says:

    Hy no problem, not to worry, the stock pushers and you metal bugs will get your general Bernakapart to ride in with the troops and bring on QE what ever to get your stocks and metal up and drill another hole int the dollar, while continuing to pound us savers who \did the right thing\ in our low class lives and live below our means and actually \save\ some of those worth less dollars what ever it takes to keep the intrest rates at 0

    those CNBC clowns are so funny, the market drops 300 and goes back to 296 and first thing out of their mouth is \its off its LOWS\, smirks man

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