No, not for you, for the banks. That’s what the Federal Reserve is doing supposedly to stimulate the economy, loaning the banks money at virtually no interest
There are a couple of things wrong with this policy that at the same time take money out of your pocket and put the economy at risk. Of course the first only applies if you have a little money in your pocket. If you have done the right thing and saved your nickels and dimes for 30 or 40 years so you could take care of yourself instead of being completely dependent on the government, you are getting robbed. When you are retired, you need income from your investments to live on and you need to move away from the ups and downs of the market so you are going to be putting your money into certificates of deposit, bonds and money market funds. But as long as the government is lending money for nothing, banks and investment companies aren’t going to pay you anything either. My money market account is paying such a small fraction of one percent that I doubt they could afford the postage to send me a statement to tell me about it.
Some of this is supposed to stimulate the real estate market but house prices have dropped 30% to 40% in most markets. How much stimulation do people need if they really have an interest in buying? If a 40% discount doesn’t get them moving, they aren’t really going to move.
Another thing is that all this money may end up going into low risk government investments which allow banks to make money for doing nothing or into higher risk investments just because it’s available.
One the main causes of our recent problems was vast amounts of easy credit from the government or created by government. So they are doing it again.
We need higher interest rates to stimulate saving as well as to pay people who are doing the right thing. Putting unlimited supplies of money out inevitably leads to some sort of bubble. It may be a sweet tasting poison but it kills just the same.
