About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

Featured Savings Rates

Popular Posts

Featured Accounts

No FOMC Policy Changes, Bernanke Tells Savers Low Rates Are for a "Greater Good"


No FOMC Policy Changes, Bernanke Tells Savers Low Rates Are for a "Greater Good"

The Fed finished its FOMC meeting this afternoon, and unlike the last two meetings, there were no policy changes or new stimulus. In addition to the FOMC statement, the Fed released economic projections and Bernanke held a press conference.

One change in the FOMC statement from its September statement was a slightly improved outlook for the economy. This can be seen in the opening line. The November statement started out with:

Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter

The September statement started with:

Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow

However, the Fed's economic-growth projections were revised downward from the June projections. The Fed thinks unemployment will remain at around 8% in 2013. I'm afraid this points to a very long low-rate environment.

One last interesting thing to note about the FOMC statement today was that there was one dissenting vote, but unlike past dissenting votes, it wasn't from the inflation hawks. It was from Charles Evans who wanted to see more policy accommodation.

Bernanke's Press Conference

There were a few interesting questions in Bernanke's press conference. A question was finally asked regarding the monetary policy's effect on savers.

Can you talk about what impact you have seen of operation twist on longer term CD rates and investment rate bond yields and do you have any message for people who are relying on those kind of instruments for income.

Bernanke acknowledged the negative effects that an extended low rate environment has on savers and fixed income investors. He said savers should focus on a "greater good" - the health of the economy.

We are quite aware that very low interest rates particularly for protracted period do have cost for a lot of people. That have costs for saver. We have complaints from banks that complain that their net interest margins are affected by low interest rates. Pension funds will be affected if low interest rates for protracted period require them to make larger contributions. So we are aware of those concerns. And we take them very seriously.

I think the response is though that there is a greater good here which is the health and recovery of the U.S. economy. And for that purpose we have been keeping monetary policy conditions accommodated and trying to support recovery, trying to support job creation. After all, savers are not going to get very good returns in an economy which is in a deep recession.

Ultimately if you want to earn money on your investments you have to invest in an economy which is growing. And so we believe that our policy will ultimately benefit not just workers and firms and households in general but will benefit savers as well as the returns that they can earn on their investments will improve with the improvement in the economy.

Bernanke clearly believes the Fed's monetary policies have helped and will continue to help the economy. The first question a reporter asked was what he thought about the GOP leaders' objections to the Fed's policies. Bernanke said that their concerns about inflation have proved not to be valid. In my opinion, it's worrisome to think about how bad inflation will have to be before Fed will act to lower inflation.

Future FOMC Meetings

There is just one more FOMC meeting for 2011. It's scheduled for December 13. The first two meetings in 2012 are scheduled for January 24-25 and March 13.

Related Posts

scottj   |     |   Comment #1
thankfully in a little over a year this clown will be gone
Anonymous   |     |   Comment #5
#1: Unfortunately, Bernanke's term ends in January 2014, so I think we'll have him around for another two years.  Even if the Republicans win the White House and Congress in the fall 2012 elections, I don't think this guy will leave office voluntarily as long as he has further damage to do to the economy.  He really can't resist lowering rates and depreciating the currency.  It's his nature.  He gets off on it.  He'll probably insist on being impeached, and that won't happen, in my view.
Anonymous   |     |   Comment #8
#1, what makes you think that this clown will be gone in only 1 year?  This is the Chairman of the Fed we are talking about...not Barack Obama.  Bernanke gets 10 year terms, and has MANY years left in this term as Chairman of the Federal Reserve.  The President may come and go, but the Fed Chair stays on and on.  Others on the Fed committee, that decides the issue of interest rate manipulation and money-printing (the FOMC) are even more in favor of printing  money than Bernanke (take Chicago Fed Branch President Charles Evans, Boston's Rosengren, et. al.).

Ladies and gentleman, if this does not tell you to stop buying, and CASH OUT long term CDs even at the cost of heavy penalties, and buy precious metals like gold, silver, platinum, you are doomed to be impoverished.  Your savings will surely be wiped out by runaway inflation. 

The government lies about inflation already.  We now have a real inflation rate of over 6% (see, www.shadowstats.com).  That 6% is growing very fast, and has occured in the middle of the greatest depression since the 1930s, when consumers are at their wit's end, and unemployment is very high.  Can you imagine what is going to happen if and when the economy actually recovers, in spite of this idiot, Ben Bernanke and his corrupt group of merry men at the Federal Reserve? 

We are going to see triple digit inflation (real rates, not the "cooked up" rates reported by our corrupt government) by the end of 2013/beginning of 2014.  Savers in fiat money will be wiped out.  This is almost a certainty. Think about how stupid the current fiat money system is.  The Federal Reserve buys treasury bonds from the U.S. Treasury, and then says that its dollars are "backed" by treasuries.  But, the "dollars" are actually Federal Reserve Notes, instead of constitutionally mandated US banknotes redeemable in gold or silver.  The Federal Reserve "Note" is a debt of the Federal Reserve.  The U.S. Treasury takes delivery of newly printed Federal Reserve Notes and tells us that its treasury emittances are "backed" by "dollars".  So, we have a merry-go-round Ponzi scheme where debt is backed up with debt.

When will the Ponzi fall apart?  Very soon!  BUY GOLD, SILVER AND PLATINUM.  They go up and down a lot (volatility) in terms of Federal Reserve Notes, but that is because the purveyers of the paper Ponzi-scheme money deliberately increase volatility in precious metals to scare off people like you who would, otherwise, put most of their money into metal, as wise folks have done for 10,000 years before the Ponzi scheme began. Every single paper money that has ever existed, including the paper money of China during the age of Kublai Khan, has ended up being worthless.  Yet, gold and silver coins from thousands of years ago are worth more today than ever before.

If you are bullheaded enough to continue to want the false "safety" of bank deposits, in spite of the fact that they are NOT safe at all, then keep some long term CDs, but accept the fact that you are going to lose most of the buying-power value of the Ponzi-scheme paper "dollars" within them.  Folks, I am also a saver by nature, just like you, but since 2006, when I investigated paper money, and first realized that it was a Ponzi scheme that was going to collapse, I have saved in metal.  That allowed me to escape the stock market crash also, because I sold everything at the top.  Stocks are also a Ponzi scheme of a different sort, but that discussion will wait for another day...

Good saving, folks...in metal!
Brett CPA
Brett CPA   |     |   Comment #9
#8 has some really wise comments, as does #7.  Bravo.  All my clients are resistant to metals, I may have to make a pitch for it.  One of the partners here is high on rare coins also -- he feels that they have done very well over the last 30 years, pretty much in a straight line up.  I think he is right.
Anonymous   |     |   Comment #13
#9 - Sorry Brett CPA, but I go to my CPA for accounting and tax advice, not investment advice. Maybe thats why your clients are reluctant to listen to your 'investment advice' regards precious metals? Just sayi'n.
Allan P. (also a CPA)
Allan P. (also a CPA)   |     |   Comment #16

Sorry---I'm also a CPA, have been one here is SE Ohio for 33 yrs.  And have four CPA's working for me. We routinely advise our clients on suitable investments, and review what they are doing financially.  It's our job and what we went to school for.  You are very misinformed.
Anonymous   |     |   Comment #19
#16 - Does the CPA exam include specific questions relating to the giving of investment advice to clients? Seems that if you 'went to school' to learn how to give investment advice, then a section of the exam should be devoted to testing your knowledge relating thereto. Just curious.
Anonymous   |     |   Comment #21

CPA's are trained and tested on investments; in school, there is usually a module (at least two required classes) on counseling clients on investment options based on their individual situations.  State exams vary on what is tested.  CPA's are not 'investment advisors', per se, but counseling clients on appropriate options is part of their job.  I teach professional accountancy at a large NJ public unversity.
Anonymous   |     |   Comment #22
#19 - Thanks for pointing out that you, as a CPA, are not a qualified 'investment advisor' in terms of the standard CPA education...a big difference between investment options counseling, financial planning and investment advice per se. Hopefully, your clients are aware of the distinction. And, to be clear and for the record, the CPA exam does not contain a section relating specifically to investment advice, so I think it is  fair to say that CPA's are not trained to be qualified investment advisors based on the standard educational process. That is, unless I am very much misinformed, as you stated in #16 above.
Anonymous   |     |   Comment #26

Doesnt know what he/she is talking about, must have an issue with CPA's.  My husband and son are CPAs, my husband has been for 24 yrs.  CPA's definitely are required in their education to be knowledgeable about investment options and can legally counsel their clients accordingly.  At least here in CT that is the case.  They are not "investment advisors," but can offer appropriate counsel about stocks, bonds, etc. as part of their practice and as related to tax issues and investment goals.  #22 is misinformed.
TimothyC   |     |   Comment #31
#26 is obviously biased speaking up for the hubby and sonny boy and such, and, for some reason, sounds bitter to boot. Wonder why.

Arielle   |     |   Comment #32
#26 TimothyC is really "Jacob", a poser.  Such negative comments should be deleted.
Anonymous   |     |   Comment #2
The Fed's policies has focused on the unemployed.  All others have to "suck it up".  Otherwise, they expect that you could join their ranks later.
Anonymous   |     |   Comment #3
Bernanke is a first class ****!  Maybe he and Geitner can start their own bank - "Circling the Drain Bank" would be an appropriate name!
operation twist
operation twist   |     |   Comment #4
and paulson was a rocket scienctist
Anonymous   |     |   Comment #6
So the conservative investor/saver, who relies on their interest income as the primary source of income for their survival, is supposed to be content with the Greater Good answer? Further proof, not that we really needed it, that Ben does not give a whit about us, except as substantial contributors to the redistribution process. His remarks are yet another signal that things will get a lot worse for us before they get any  better....got to take care of the banks, wall street and the many, many public trough freeloaders, dontcha know. 
Anonymous   |     |   Comment #7
This reader watched the entire news conference and listened to the Q & A.   I would like to add my own 2 cents to things I think Bernanke neglected to tell in repsonse to Ms. Lewis' question regarding longer term CD rates for savers as follows:

1)  With regard to the banks' concern for their net interest margins --- I ask --- Did not the Fed bail out the banks?   It's payback time.

2)  Big companies and corporations may have to make larger contributions to their pension funds.    Hasn't anyone heard that big companies are busy borrowing at historically low rates in the long term bond market and locking in dollars for the future.  It was just discussed on CNBC recently.   So they have to put in some more of the borrowed money (hot off Mr. Bernanke's printing press) that they are getting at such cheap rates.   Does anyone feel sorry for them?

3)  Savers -- did the Fed do anything for them?   Nope!! But guess what --- they pay the price in reduced returns on their Certificates of Deposit at the banks.

4)  Senior Savers --- those who from experience have decided not to risk their life's savings in the stock market.   Their 401Ks and IRAs will earn practically nothing which means they will receive thousands of dollars less than they would have been getting over the next 10 years due to the next to nothing interest rates available.    So a 70 year old is supposed to wait until he's 80 to get a better return?  Oh, it is for the greater good?   Duh?   Whose greater good? --- the Big Banks,  Big Companies and Corporations.  

In another part of the conference Mr. Bernanke mentioned he expects mortgage rates to go lower.  Oh, he's bailing out those who borrowed and gambled and took on too much debt, let them refinance at super cheap rates --- at whose expense?  you guessed it -- savers' expense---  

In my opinion Mr. Bernanke is rewarding those who are responsible for the mess we are in ---

The savers are getting the short end of the stick.   There are millions of seniors and senior savers out there being dumped on by the policies of the Federal Reserve as well as by the politicians in Congress.

Where's the outcry for fairness?


Anonymous   |     |   Comment #10
#7, fairness doesn't exist in the American economy.  The deck has been stacked by our corrupt Federal Reserve, which is actually a slush fund for the big banks who speculate on the market.  Savers are so careful that they don't give much in campaign contributions and don't get very involved in the political process. 

Combined with the fiat money system that allows unlimited printing of worthless debt dollars (Federal Reserve Notes) by an organization controlled by speculators (the Federal Reserve) it will mean a royal ****ing for savers.  In the financial world, it is survival of the fittest.  Dog eat dog, especially now.  This will continue for at least the next decade as the world's fiat money falls apart with speculators trying desperately to save their dying stock market investments by printing money and thereby destroying the currency system.

The great economist, Ludwig Von Mises taught that a boom bought on by credit expansion will always go bust, and the timing of the collapse will only be delayed at the cost of destroying the currency system involved.  That is what is happening right now.  Bernanke, Obama, and the rest are simply buying time for their speculator friends, allowing them to reposition themselves for the destruction of the currency system.  If "savers" don't catch on to the idea that "saving" is NOT SAFE, in some sense, they almost deserve what they are going to get.  They are prey animals that will be eaten by the carnivores of the financial world.  They are the passive prey that corporate America will devour. 

Anyone who has long term CDs should sell them, even if it involves a substantial penalty. The only way to go now is precious metals, because the stock market is being heavily manipulated on the upside.  Short term demand deposits are ok, only because you can exit them at will.  Because precious metals are heavily manipulated on the downside, when the whole thing falls apart, they will soar even higher than they have already.

When the Ponzi scheme collapses, and it will happen in the next few years, American and European stocks will collapse by 75% (in real value after inflation).  The Euro will end.  Dollars and British pounds will transform to, perhaps, a buying power value of about 1/7th of what they have today (if we are lucky).  Access that almost inevitable outcome, against the sub-3% per year long term CD rates you are being offered! 

To add insult to injury, I am almost sure that, when push comes to shove, and the double-digit and then triple digit per year inflation arrives, the banks you are storing your money in will unilaterally change the CD termination penalty so that it will be impossible for you to exit.  Then, you will be stuck for 5-10 years in an investment earning 2.5% interest as the cost of living triples or quadruples as it did in the 1970s, but probably much more than that (because this episode of inflation will make the 70s pale by comparison).
GMa   |     |   Comment #46
#7 and #41...appreciate your comments. At the very least, they helped a wee bit to calm the frustration I feel now that my carefully planned retirement has been torpedoed by Mr. Bernanke and his biased and misguided policies...it's just comforting to know that at least SOMEBODY understands. Think of the stress and anxiety an unanticipated / unprecedented 60% drop in income is causing for millions of seniors...just so the banksters and corporate gamblers can be propped up at our expense. Just one more example of the death of common sense and rampant corruption that prevails today as a result of our government / corporate collusion.
scottj   |     |   Comment #11
Hopefully the Republicans will be able to pressure him out if they take the White House and Senate. This makes the 2012 election even more critical now, Can you have a more Socialist term than "for the greater good"? If Socialist Obama gets re-elected and appoints him again we are ****ed.
Shorebreak   |     |   Comment #12
"Ultimately if you want to earn money on your investments you have to invest in an economy which is growing."

That's Bernankespeak for everyone should place all their funds in the stock market.
cuidado   |     |   Comment #14
8 i was told  have email to support  and i quote do not get  SJ MAD AN D Ithink the reason hre suffers from a bad case of twisted pelotas just my cinco centavos
Anonymous   |     |   Comment #15
Great post 14, you're certainly on to something big....now go away, for the Greater Good of us all.
OPA   |     |   Comment #17
GREECE is toast  can any one say baklava
prozac   |     |   Comment #18
right after u  15
truly amazing
truly amazing   |     |   Comment #20
that if the economy was good nobody would be bashing cpas  or their broker  o well some one has to be the whipping boy
Paoli2   |     |   Comment #24
I think on Bernanke's tombstone it should read "HE'S GONE!  FOR THE GREATER GOOD!"  What crap is this to expect us to really believe anything he is doing is for any one'e "greater good!"  Frankly, I hear nothing from any of the new candidates that will help to save us so no use looking for a doorway out of this Hell for us! 
MBA   |     |   Comment #28
CPAs are idiots, they have no investment knowledge. Just saying.
Aliescean   |     |   Comment #29
Must be Bash Accountants Day.  it's amazing how financially illiterate some posters are (ex., #22). just sayin'.
Anonymous   |     |   Comment #30
Kudos to #24 Can't wait till he's gone from the Federal Reserve --- have you seen the Bernanke visits his psychiatrist video?--- the link is in the forum.   It is hilarious!
scottj   |     |   Comment #35
No I only post under my registered name. Most of these moronic posts are being done by the same person who has been banned from other sites.  Really need to change how posting can de done, should need to sign up.
Pablo savin
Pablo savin   |     |   Comment #36
yes it is I, Pablo Savin. my CPA gives me some financial advice, and I find the best CD rates for him using this site. The Feds are killing us. But , I wish I had to borrow money now, when the rates are low. the greater good means the elderly will be eating their pets in the future. Why is that good?
Anonymous   |     |   Comment #39
for the greater good bernanke should go away along with the GOP
just wondering
just wondering   |     |   Comment #40
all the people who bash the powers that be do any of  you vote  or do anything productive  my guess is no
Bozo   |     |   Comment #41
Getting back to what was left unsaid by Bernanke. I would have pressed for a follow-up as follows: "Mr. Bernanke, you acknowledge that those who rely on savings interest to supplement their incomes in retirement have suffered as a result of these low rates. Has the Fed calculated the drag on economic recovery this has created? If so, how much? If not, why not?"

I think it is fair to assume these calculations are fairly straight-forward. If creating "X" number of jobs at an average take-home of "Y" adds "Z" to the GDP (we hear those types of numbers all the time), then creating (or eliminating) a certain amount of disposable income in a given demographic also adds to (or, conversely, acts as a drag on) GDP.

I would agree that, in an expansion where business is a net borrower in order to increase capacity, low (and lower) rates "goose" that expansion. That is not the case these days. Companies are sitting on massive piles of cash. The problem is lack of demand, not high borrowing costs. Ergo, one way to increase demand would be to increase the disposable income of that demographic most hurt by low rates, by raising them.
Anonymous   |     |   Comment #42
Now that is what I have been thinking and saying to friends right along. 

But us commoners have little or no power to change things.  Voting?  Just look at the candidates we presently have running for president.  Is this really the best our country can come up with?  We're in bigger trouble than the masses realize.
Scottj   |     |   Comment #43
Also many people who would be retired right now are working since their savings does not generate enough income. So higher rates would help employment
Jim B.
Jim B.   |     |   Comment #47
I hope Bernanke dies broke due to his policies, his retired parents also! He os not a friend of us in Sum City.
take a hike JIMBO
take a hike JIMBO   |     |   Comment #48