When will the government stop penalizing savers.

Ignoring people who are just trying to be responsible, it doesn't seem the government has considered the plight of people living on fixed income at all here. http://www.nytimes.com/2009/12/26/your-money/26rates.html?ref=business Millions of Americans are paying a high price for a safe place to put their money: extremely low interest rates on savings accounts and certificates of deposit. Joe Parks,... [more]

Ignoring people who are just trying to be responsible, it doesn't seem the government has considered the plight of people living on fixed income at all here. http://www.nytimes.com/2009/12/26/your-money/26rates.html?ref=business Millions of Americans are paying a high price for a safe place to put their money: extremely low interest rates on savings accounts and certificates of deposit. Joe Parks, a retired accountant in Houston who sits on the volunteer advisory board of Better Investing, said that with low interest rates and fees, retirees and the elderly could take anywhere from a half to three-quarters of a percent cut in their incomes. The elderly and others on fixed incomes have been especially hard hit. Many have seen returns on savings, C.D.’s and government bonds drop to niggling amounts recently, often costing them money once inflation, fees and taxes are considered. “Open a Savings Plus Account today and get a great rate,” read an advertisement in the Dec. 16 Newsday for Citibank, which was then offering 1.2 percent for an account. (As low as it was, the offer was good only for accounts of $25,000 and up.) “They’re advertising it in the papers as if they’re actually proud of that,” said Steven Weisman, a title insurance consultant in New York. “It’s a joke.” ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Experts say risk-averse investors are effectively financing a second bailout of financial institutions, many of which have also raised fees and interest rates on credit cards. “What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,” said William H. Gross, co-chief investment officer of the Pacific Investment Management Company, or Pimco. “It’s capitalism, I guess, but it’s not to be applauded.” Mr. Gross said he read his monthly portfolio statement twice because he could not believe that the line “Yield on cash” was 0.01 percent. At that rate, he said, it would take him 6,932 years to double his money. [less]