What's Killing the Economy

Screen capture from Dec 1, 2019

Just a quick post today.  I'm amazed that people who comment on the economy, including Bernie, aren't talking about a huge change in banking practices that is killing the US economy.  Simply put, banks are not offering savings options that offer at least a 4% return on investment.  That means that savings accounts and CD's are no better than putting money in your mattress.  And this has been going on since the 2008 economic crash which took out the better part of the auto manufacturers, when they needed a bailout to keep functioning. The trend of lower and lower returns on simple investments has been going on for decades though.

What's interesting is that even when the problem with savings accounts is mentioned, it's talked about as if it's a new idea that only happened three years ago (2016) when in fact the trend has been like this for decades.

It's nearly Chistmas and I have one wish. That the banks would get real. So as a person who has to buy expensive gluten free flours, not for fun, but because I literally can't eat anything else, this is my take on monetary policy. Fundamentally I think it's time to listen to the Boomers, not ridicule them as out of touch.  More on that below.

Why economics matters to people with Celiac Disease


1.  Gluten Free Bread is around $7-10

2.  Gluten Free Cookies and Crackers are $5-7 and the size is about 1/3 of a regular box of cookies or crackers.

3.  About $12 for a 14 inch Gluten Free Pizza (frozen)

4.  People regardless of economic status may become Celiac at any time. The only treatment for Celiac is the Gluten Free diet.  And it's not just people with Celiac.  Many have Non Celiac Gluten Sensitivity, or Ehlers Danlos Syndrome, or Gluten Ataxia, or Irritable Bowel Disease (Ulcerative Colitis and Crohn's Disease).  It's also the standard of care now for IBS (Irritable bowel syndrome) to get rid of wheat in the diet because it contains troublesome FODMAPs.

5.  Xanthan gum is marketed as the solution to problems with baking gluten free substitutes.  But it's not needed in most recipes where it's used and it's extremely expensive. Its popularity has driven the price of other gums up as well.

6.  Celiac is a disability covered under ADA and if you end up in the hospital or a nursing home, staff are required to properly prevent cross contact between your food and gluten containing food.  That's problematic enough.  But all the other diseases I've mentioned above in #4 aren't covered by the ADA for provision of gluten free food.

7.  What about loss of work hours due to Celiac reactions?  Having Celiac, especially undiagnosed Celiac can lead to permanent disability.  That puts many of us on a fixed income at a time when inflation will erase bits of that benefit.

Good fiscal policy is not only a good idea in general, but it's an expression of who we are as a society. 

4% Average Inflation as a Yardstick

Anyone who's taken a simple economics or business class in college or in high school, knows that the inflation rate is on average about 4% per year when averaged over 10 years.  So a savings account is supposed to keep your money saved for later.  But for the past several decades, it's not doing its job.  In the 1980s savings accounts went down to 3% per year, then 2% then 1.5%.  At about that point, I went to college and my economics class there told met hat the best way to have savings is to use MMA's or CDs which return at least 3%.

Now look.. not even 2% and only from an online bank (see image above), or credit card company.  And it's been this way for decades!  

OK Boomer as a Wedge between Generations

Millennials, that generation everyone criticizes, has never, ever seen a proper return on a savings account or simple investment, in their whole life.  They're living at home with their parents because that's what people do during recessions and the Great Depression of the 1930s.  It's not their "fault" that the banks decided to create a recession generation, then ridicule them in the media for doing perfectly normal things.

Similarly, the OK Boomer thing is specious.  It's the Boomers who can tell you what it was like to get a proper raise every year, and to have a proper savings account that protected your money from inflation.  Their parents were the last generation who nearly all had pensions and strong unions.  The only thing I see in the "OK Boomer" development is a cynical attempt to try and drive a wedge between two generations.  A wedge that protects corporate interest, to the detriment of Millennials.

Just look at how the phrase is used to cynically insult and try to coerce Boomers into making retirement decisions. The usually slow moving financial industry sure jumped on that phrase quickly.

Online Banking Provides a better Return

The only people who do online banking are those who can afford to have a computer recent enough to be safe to use that way.  And we're constantly finding out that municipalities are hamstrung in their efforts to just provide basic broadband services to people.  Watch this brilliant explanation to understand why this combination of internet banking plus local banking APY, is nothing if not racist.  But even more important, if you want a good economy, you're going to have to let people have money to spend.   

We can decry the "commercialization" of Christmas, and the proliferation of paycheck borrowing services, but it's the general deepening of poverty in every sector of America that's causing a problem.   And it's been going on for decades.  So now you don't need to wonder why phishing is such a big issue and why it hurts the poor more than the well off.  We may decry these things, but who's doing anything about it?

I have no problem with people working hard and getting rich.  That's great.  But even those who are entrepreneurs today are feeling the pinch.  I have a problem with laissez faire economy. Yeah that's a thing.  And it has been hurting us for too long. No entrepreneur has a secure future without a banking system that provides a decent return on savings accounts for his or her customers.

If there is a class war, it's between the entrepreneur and the established multinational corporation. 
If our lawmakers can't see this connection, and fight back against internet redlining effectively, then we need to vote them out and find people who will help.  If the banking industry is too tough to fight, then we need to find SEC officials and elected officials who will do the right thing and mandate that savings accounts and CDs should be restored to their glory.  You can literally watch in the graphic below the decade of the 2000s, when there was a hiccup in the economy and returns tanked.  Then they were brought up.  By 2008 when the recession was undeniable, returns tanked and stayed that way.  

We need our savings banks in local branches to work.  We can't tie banking to the availability of the internet, or the credit rating of every person.  Putting less than inflation returns into CDs and savings accounts, and limiting them to internet connected people who have good credit is an economy killer.  Banks are currently worse than a mattress.  You'd have to evict and repossess everything to get someone's mattress money. That's harder than putting a lien on it.  And either way, inflation nibbles it away.

For those of you who do have a bit to put away, do consider using a CD but it won't reach inflation levels, not even if you're putting a lot away:


And it doesn't help to make a larger investment either. Try it, go to that site and change the settings to include larger investments.  The banks simply aren't allowing people to get any kind of decent return.  Until they do, we won't feel like we're moving forward.  Because we won't be.

Some people reading this are thinking, yeah but what about money market mutual funds, bonds and other almost safe hideaways?  Well the news on that front is getting worse and worse.  The ROI is now about 1-3%  for mutual funds, which is savings account levels.

Sure you can get another percent, but we're still below the 4% of average inflation over a 10 year period.  That's the amount I was taught in Economics as the rule of thumb for inflation.  It's meant to be used to judge the quality of investments. An investment must be beating average inflation over 10 years to be worth buying.  Here's the actual numbers if you want the details of each decade.  That site seems to have a lot of ads.  If you know of a better one, let me know please.  If the article's missing, there's a screenshot of it here or here.

Since the 2008 crash, there has been NO investment worth having except for specific funds with large buy ins.

They're all boneheads

Trump called for even lower interest rates, and thankfully "The Fed" fought back.  However what is this about 'we don't expect a recession"?  We've been in one for decades.  Until you allow people to save money, we're in a recession.  Either you need to force all employers to give everyone a 4% increase in pay every year, or you need to fix the banks.  Choose whichever is less unpleasant.  But act now.

This is why we have this problem.  We're all wondering where we're feeling the pinch.  We're feeling it because of pay rates that are abysmal, and investments and even savings accounts that have been robbed for more than 10 years by a banking system that can't manage its own finances.  And the media keeps quoting experts who are bent on maintaining the illusion that there is no recession.

Why Bernie is so Angry

As an aside, do you know how hard it is for  woman whose family escaped Communism to embrace Bernie as a candidate for President?  And AOC, and the Squad?  The thing is, nobody else is willing to put any reigns on the rich robbing the poor except them.  I'm reminded of my grandmother.  She said she was with the Communists until they took power and started again robbing the poor and giving to themselves.  Sometimes literally, as in, invading a home and taking handmade goods and delivering them to the local Communist official's house.  These things happened and worse. So keep in mind that I don't take his "Democratic Socialist" opinions lightly.

If you want to know why Bernie is so angry all the time, it's because nothing we've done in the past several decades has been logical.  He's right and people would rather look at his Independent affiliation and statements about Democratic Socialism than listen to what he's saying. I suggest we start listening.

I don't see Bernie as a threat to our democracy or freedom.  I don't see him wanting to do more than make laws to put proper restrictions on the worst behavior of large corporations, including banks.  That's what we need, so I'm coming out with my support for Bernie.  He's what we need now.

It won't change our form of government to elect Bernie, and he has the ideas we need.

I remember in 2003 having a feeling of great optimism, let's recapture that. And this time, let's keep it from destroying our economy with excessive profiteering. You simply can't have an economy where 90% of the people are losing money due to inflation because banks won't protect their savings, and there are no safe investments anymore. Plus the savings accounts that work (a little better) are only available to those who do online banking.  Until we fix that, we'll feel the pinch and new businesses will not thrive.


  1. Hi- I think that you are complaining about the lack of inflation, actually. The interest rate is almost always following inflation.

    To offer an average historical figure for inflation and expects banks to pay interest based on historical inflation and not current economy is unrealistic.

    I have all my money in CDs as I will not support the corporate stock market economy scam. So, I am personally seeing very little income after inflation. Sure, I do wish the value of money was higher so could earn some interest above inflation to retire on. But no bank wants to lose money. They follow the market instead, riding the line between market rates and what is predicted for the future, not so much what the numbers were in the past.

    1. Thank you for your comment. I appreciate the insight. I wish I could tell you why this is happening. Maybe there is a logical reason, but if so, it hasn't been widely talked about. There are times I wish I had paid more attention in economics classes. I hope that we can work these issues out so that everyone can at least save money again. The current inflation rate for 2018 seems to be around 1.9%, and the only banks offering even 1.8%, are the online ones. For several reasons, poor people have a hard time using online banks.


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