Savings, America’s Capital Depreciation Fund

Peter Peterson, the founder of the Blackstone group is lamenting the lack of personal savings in the US. He says this is a bigger problem than the current recession. He may be right when he says that since there is no domestic savings, foreign countries holding our debt can hold our economy hostage.
Unfortunately he blames our attitude of “want it now” for out lack of savings. Here he is dead wrong. If you go and open a savings account these days you will find out two things.

1) You will likely pay a fee for having a savings account.

2) The interest rate you receive on your savings will likely be well below inflation.

Bottom line, when you save, YOU LOSE MONEY.

I don’t know about you but I can’t see why the interest rate on savings shouldn’t be some percentage of the loan rate, AND it should always be better than inflation. The banks are jerking us around, charging fees everywhere they can, keeping savings interest rates low, and now using our tax dollars to pay exec salaries and bonuses. Mr. Peterson has a lotta sand to sit in his fancy suit and talk to us about how bad we are for not saving.

Maybe in our little way by not saving we are telling the MARKET that we want change. But why should they change, if we don’t give them enough at the teller window, they’ll get it from our tax bill.

Banks- or- I wish Adam Smith’s invisible hand would stop touching me there.

Adam Smith

Let’s talk about banks. I remember, back in ancient times when I was in school, being taught that banks pay you interest to keep your money and use your money to make loans and investments. From the loans and investments they make their money. In other words, they pay you to borrow your money, and you pay them to borrow the money that someone else has loaned them. Simple right, but something has happened. I can’t understand why the interest you receive for any kind of deposit doesn’t AT LEAST match the inflation rate. The experts always say Americans don’t save enough but why should we, if you save in a typical saving account you are losing money. If inflation’s 3.5 to 4% and your savings are getting 1.5 to 2%, less fees for EVERYTHING, you are losing a nice little chunk of change. Meanwhile, your full SERVICE bank is charging probably 9 to 15% for non-home loans while charging you for everything.

Not only are they charging for everything, but they are finding ways to develop new profit centers. Take debit cards for instance. When these things started, they were perfect for new young adults, use them like a credit card but when you were out of money they stopped working. No more! The Banks fixed them so they will continue to charge, just like a credit card but with a fee for EACH PURCHASE. Oh, and if a purchase includes a security deposit, like rentals do with credit cards, and the seller doesn’t tell you, like they do with credit cards because it automatically clears before it matters, the money comes out of your account immediately. So if you rent some ski equipment and they put a fee on your care equal to the value of the equipment, then you return the equipment and go have dinner, that deposit will probably still be hanging around, maybe for a couple of days. Now each purchase you make gets wacked with an overdraft fee. You buy some Chapstick, that’s a $35 purchase. I don’t know what the reasoning was behind the change but it probably was something like, save the customer the embarrassment of being refused. Hell, if it’s gonna cost me $35, embarrass me. Sure if it’s a choice of getting arrested for a bad check or the fee I’ll take the fee, but these card systems are more sophisticated than that!

I think that the reason they do it this way is because they can!