Unfathomable Stupidity Uttered By Our Federal Reserve Chair

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Yellen says US families need to boost savings

WASHINGTON (AP) — The Great Recession showed that a large number of American families are “extraordinarily vulnerable” to financial setbacks because they have few assets to fall back on, Federal Reserve Chair Janet Yellen said Thursday

Yellen said a Fed survey found that an unexpected expense of just $400 would force the majority of American families to borrow money, sell something or simply not pay.

“The financial crisis and the Great Recession demonstrated, in a dramatic and unmistakable manner, how extraordinarily vulnerable are the large share of American families with few assets to fall back on,” Yellen said in a Washington speech.

She said the bottom fifth of households by income — about 25 million households — had median net worth in 2013 of just $6,400, and many of these families had nothing saved or negative net worth, meaning their debts were greater than their assets. ………

Yes, Janet, you idiot, we should save more money.  Except, interest rates on our savings is …. well, zero, or near zero, depending upon the type of account.

Given that the inflation rate is above the savings rate, why would anyone do this?

This is the problem with fractional banking.  Yes, I want, and have a little nest egg.  But, I’m not ever going to have a large nest egg, at least, not in any currency, much less the US dollar.  It’s stupid to do so.  Save money, and it’s guaranteed to be rotted away by inflation. 

Janet, you want to fix this?  Make sure banks have enough cash on hand to cover their debits.  Then, we’re done, and this problem is fixed.  Oh, but, then, the need for the federal reserve is diminished in a great manner, isn’t it?

In recent years, all the federal reserve has done was to ensure that the American people didn’t save money.  And, they continue to do so.  They, like all the other Keynesians, believe immediate spending substitutes for a proper economy. 

Now, some of the idiots are coming to believe we should save money?  Why and how?

Well, here’s how.  Buy assets.  The ones with the most lasting value are gold and silver for one side, land for another. 

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15 Responses to Unfathomable Stupidity Uttered By Our Federal Reserve Chair

  1. philjourdan says:

    People have no money to save. They spent it due to increased taxes by Obama and lowered wages due to his policies. On top of the inflation caused by Obama.

    • suyts says:

      What can they save? And why would they?

      • philjourdan says:

        The incentive to save in inflationary times is created by interest rates that prevent the evaporation of value of the savings. The Fed has ensured that is not possible with the worst possible combination, inflating the money supply (which cheapens it – i.e. inflation) while keeping interest rates low to discourage savings – in other words – the opposite of what Volcker/Reagan did to fix the 70s mess.

        • cdquarles says:

          Indeed and the longer they put off the day of reckoning, the worse the crash will be. Sure, they’re hoping for that day to be when there is a conservative in office, Funny thing is, like Harding/Coolidge and Reagan, they might find out (again) that the conservative, to the extent the rest of the administrative state does what it is supposed to, would implement policy that works and either avoids the damage or minimizes it.

      • Jason Calley says:

        I was going to make a longer comment, but you two have already given the pertinent facts Most people are border line broke and don’t have much to save. And if they did have extra, they would be foolish to do anything with it other than to buy tangible and stable assets — tools, land, metals, etc.

        One of the happier events to me personally has been getting up to speed on Austrian Economics. I always though that economics (the Keynesian version) did not make sense. I was right. Now Yellen runs a cartel that mandates essentially zero interest rates on savings, but wonders why people don’t save. Maybe she is stupid. No… I don’t think so. Maybe she is a liar who knows exactly what she is doing. Yes, that makes more sense…

  2. DirkH says:

    Adding insult to injury.

  3. Aaron says:

    Bullets, booze, and precious metals. Gotta plan ahead.

  4. DirkH says:

    BTW, Fed statistics show that USA has created 1 tn new public debt in last fiscal year. Budget deficit was only 600bn.

    The other 400 bn are OFF BALANCE SHEET.

    So the implosion continues unabated, anything else would have been astonishing as no conditions changed. It’s only that they don’t admit it anymore.

  5. Tom In Indy says:

    I’d call that Yellen’s “Let them eat cake” moment.

  6. omanuel says:

    Yellen cannot be that stupid. She knew that 0% interest on saving, or less, would force people to spend their savings.

    • cdquarles says:

      Oliver, it is not just that. I’ve been there and done that. In hard times, I have to spend my savings or liquidate my assets to cover my expenses, which don’t fall as fast as my income. In good times, I do the opposite. Under the current ‘Great Inflation’ plus high effective (in terms of internal rate of return after inflation) marginal taxes/regulations, you get the worst of both worlds.

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