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Debunking Why Low Interest Rates Are Good For Savers

Friday, January 7, 2011 - 8:04 AM
There have been claims made that today's interest rate environment is good for savers since it's coupled with low inflation. If you earn 6% interest from a savings account and inflation is also 6%, you're losing out since you're paying taxes on that interest. And that's worse than if you are earning 1% interest with a 1% inflation rate.

This blog post at Consumerism Commentary has a good review of this issue. As the post mentions, there's a big difference between the government-reported rate of inflation and the inflation on the cost of necessities.
6
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Friday, January 7, 2011 - 3:12 PM
Let's see, no inflation, huh!  Have you been to the gas pump lately, maybe the grocery store, how are those lower medical bills going?  The Gov't took most of the meaningful measures out of the inflation calculation long ago. 
3
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
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