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.

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Fed's Late-2014 Interest Rate Pledge: What Can Savers Do?


Fed's Late-2014 Interest Rate Pledge: What Can Savers Do?

We learned yesterday that the Fed will likely keep rates near zero until at least late 2014. The FOMC policy statement changed from "exceptionally low levels for the federal funds rate at least through mid-2013" to "exceptionally low levels for the federal funds rate at least through late 2014". This technically isn't a guarantee that rates will stay near zero until late 2014. However, Bernanke suggested in his press briefing that it would likely take a dramatic improvement in the economy for this to be revised.

I think we all can agree that the Fed's efforts to stimulate the economy by keeping interest rates near zero have had a devastating effect on the incomes of savers. What can savers do? Several readers in my yesterday's Fed post suggested a petition to draw attention to this issue.

Based on the success of the Bank of America debit card fee petition, I think it's reasonable to give an online petition a try. However, this issue is more complicated. Who should the petition be directed to? What should be asked? And how realistic should be the petition's goal?

So here's my plan. If you like the idea of a petition, leave a comment with who you think the petition should be directed to. Also, describe what should be asked in the petition. From these comments, I'll create an online poll and let the readers decide the "who" and the "what" of the petition. Based on the poll and the comments, I'll write an online petition.

Before commenting, you might want to review iPetition's Guide to see how to write a successful petition. Note that tip #9 is to be practical and realistic:

The change you're advocating should be concrete and achievable. If visitors to your petition think you're just shooting for the moon, they're unlikely to sign the petition, even if they support the cause.

The debit card fee petition definitely met this criteria. It was easy for Bank of America to cancel their plans for the debit card fee. We have to ask if the change we're advocating is achievable.

Asking for Monetary Policy Changes More Favorable to Savers?

For our specific case, I doubt that asking Bernanke to change direction on monetary policy is achievable. If you believe his words in the press briefing, he thinks the Fed's monetary policy has helped and will continue to help the economy. There are many economists and pundits who will cite evidence to support Bernanke as in the case of this Washington Post op-ed. However, many economists and even a few at the Fed disagree. Two years ago I wrote about economists urging the Fed to get away from the zero-interest-rate policy. Reader me1004's comment is a good summary of the economic reasons against Fed's policy. There is a lot of debate over monetary policy. Unfortunately, I don't think a petition will help change the Fed's opinion on this issue.

Another possible target of the petition is the President. With an election coming up, the President might be willing to show support to an important constituency like seniors. However, he doesn't have much influence over monetary policy. His main influence is through his appointments to the Fed's Board of Governors. As reader Lou described in his comments, Obama's appointments have been supporters of the current monetary policies. This Washington Post page lists Obama's appointments, and this Reuters article gives an opinion on how dovish or hawkish each FOMC member has been. It should be noted that Bernanke and Elizabeth A. Duke (also considered dovish) were both nominated by Bush.

Asking for Tax Policy Changes Favorable to Savers?

Instead of asking for a change in monetary policy, the petition could ask for other ways the President could help savers. There are many tax reforms that could help. I reviewed two of these in this 2010 post. Mitt Romney's plan is to "Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains." The problem with tax reform is that it has to go through Congress. So it may make more sense pushing tax reforms to our Congressional representatives.

Asking for the Return of the Pre-2008 Savings Bond Annual Purchase Limits

There is one change that the President could enact immediately and without Congressional consent. That change is to return to the pre-2008 annual purchase limit on savings bonds. The savings bond program is under the Treasury which is under the President. So the President should have the power to make this change. In addition, this change could look politically popular to seniors and even to his base since it would reverse a policy that started in the Bush administration.

The Treasury did increase the annual purchase limit of online savings bonds at the start of this year. However, this change essentially just kept the limit the same as last year since paper bonds can no longer be purchased at banks.

The Treasury never did provide a good explanation of why they cut the annual limits to such an extent in 2008. The Savings Bond Advisor shows how extreme this change was in this post:

From 1941 to 1947 the annual limit was $3,750 (over $35,000 a year after adjusting for inflation). From 1947 to 2007 the limit was $30,000 per series. The Treasury still has not explained why the limit is so much lower now than it has been historically

The downside of this change is that it's not going help us a lot. Being able to purchase $60K in I Bonds instead of $10K in I Bonds per year won't make up for the ultra low interest rates. Also, the I Bond hasn't been a great deal now that the fixed rate is zero. However, I Bonds are now a better deal than TIPS. This Savings Bond Advisor post has an interesting review of the Fed's new inflation target and its new 2014 rate pledge in how they impact I Bonds. He describes why this is favorable to I Bond investors:

I bond investors should do better than others in the near term because they are protected from inflation. And they'll continue to do better than new TIPS investors because the fixed rate on I bonds can't be negative.

The above reasons are why I think the return of the pre-2008 annual purchase limit is the best change to advocate in a petition. The petition can still mention that savers have been punished unfairly by this extreme monetary policy. It would say that we understand that direct control of monetary policy is outside the scope of the President's powers. Thus, we ask for this specific action that the President can take without Congress to help savers. It's a reasonable change that can show his support and concern for savers.

Bottom Line

The main goal of the petition may not be something specific. It may be to just raise awareness of how savers are being punished. Savers in the UK started the organization called Save Our Savers for this purpose. Here is how they described their purpose:

Savers are fed up with being punished for their prudence while politicians bend over backwards to seek borrowers' votes - now a new action group aims to get a better deal for depositors and investors.

I first reviewed this group two years ago. The site continues to publish interesting policy commentary like The dangers of prolonged low interest rates.

Websites like Save Our Savers and online petitions may not be able to solve these issues, but they can raise awareness of how current policies are unfairly punishing savers. On the issue of the petition, leave a comment about what you think of an online petition in general. If you do like the idea of a petition, what should it ask for and who should it be directed to? If there is enough interest in a petition, I'll create a poll based on the comments to decide about the "who" and the "what" of the petition.

Related Posts

Carol in California
Carol in California   |     |   Comment #1
Ken, This is a "capital" idea.  We all saw that , if united, we aren't so easily coerced as in the BofA case. This whole low rate environment is a killer to those who today rely on their savings to generate funds to augment and sustain their lifestye, even at minimum levels. It's a disgrace to basic principles of "saving for a rainy day" and after having done so, not to be able to utilize the benefits of sacrifice. To others not needing the funds immediately, savings has begun to look like a foolish endeavor-not a good way for the country to think. The idea of presenting the petition to the President is terrific with the upcoming election upon us.

 Could I suggest that we remind him that years ago there was a line item on the 1040 that excluded  $400  of interest from being taxable. I do remember that as I have always done my own taxes. I can't remember when this disappeared, maybe with the appearance of IRAs. It could be done again as a gesture to savers who have more than done their share of sacrifice during the Great Recession and subsequent fragile recovery.  Those who have reaped benefit of the low 15% capital gains tax these many years could anti-up the cost of providing this exclusion to savers by paying a higher rate on capital gains. Somehow that seems more than fair. The amount of the exclusion should reflect the years of inflation that have ensued since the previous exclusion. Just an idea. What do the other readers think?  
Anonymous   |     |   Comment #2
Not having a specific target to voice your issue makes it hard for anyone to listen to you.  When the people who set the interest rate policies have their minds already made up, your protests will fall on deaf ears.

Savings Bonds are not liquid investments.  Many savers depend on a liquid account where the interest can be taken out at any time.  Savings Bonds do not offer that option and even locks you up for at least a year.  I guess you could try to "ladder" the Savings Bonds money like in CDs, but since Savings Bonds rates adjust every 6 months what you have is essentially a series of 6 month CDs that cannot be withdrawn earlier than one year after issue and where you pay a penalty if taken out in less than 5 years.  Not very flexible in my opinion.
Anony/Paoli   |     |   Comment #3
Ken:  What a joy to have "you" be willing to take charge of this Petition.  First of all, it is obvious that I want a Petition to be published.  I know it will not be able to get the President to give us higher interest rates but WE need our own "Save Our Savers" in the US.  I would like your Petition to state how the Fed's policy has not been a success and also how his policy is punishing savers.  I mainly want people to have a place to go to let others know how upset they are, as I am, with the severity of the low interest rates on our lives.   I think the Petition should be directed at the President but mainly it should be focused on making others know they have a place to go to acknowledge their anger about the low interest rates. I especially like the part Lou added about how the elderly are the most dedicated voters.  Since this is an election year, we have to remind them our many votes count!

Now that you are taking this over, we can disregard the Petition I typed up.  Some of us were just anxious to make this a reality.  Thank you so much for being willing to help us.
Anonymous   |     |   Comment #5
Carol in California.

I need to amend the previous post.  You are referring to a different tax return exemption regarding Schedule B.

Anonymous   |     |   Comment #6
Carol In California,

The above article link indicates the $100/$200 exemption was permanently removed with the 1986 Tax Reform Act which introduced major changes to the tax rate schedules.
scottj   |     |   Comment #7
Great Idea but they are not interested in savers. Each 1/4 point rate hike would add like another 40 billion a year just in the cost to service our debt. Thats 40 billion Obama wont be able to hand out in entitlements. 
Anonymous   |     |   Comment #8
Two tax change ideas to help savers:

(1) Make the total amount of all medical expenses, including medical insurance premiums, taken as a deduction without having to itemize?  Do away with the current itemized method which allows you only to deduct the amount of medical expenses that exceeds 7.5% of adjusted gross income.

(2) Allow all tax paying citizens to invest in a Roth IRA instead of restricting it to only the ones with earned income?

Dave0   |     |   Comment #9
You all speak as if getting paid interest for your savings is some sort of human right. Why do you think you should get paid more? As savers at a bank, you are taking no risk at all with your money, yet you are getting paid to keep your money there. You should be happy.

If you want to generate a higher yield with your money, you're going to have to take some risk. That could range from a little risk, like buying stocks/etf's/mutual funds, to a lot of risk, like starting a business.

The interest rates will rise when the economy recovers, and the way the economy recovers is by getting people with money to invest. Whining to officials about your FDIC insured interest rates being too low isn't going to solve anything.
Anonymous   |     |   Comment #14
#9  The way the system was supposed to work was:  The savers "loaned" money to the banks by purchasing CDs etc. at a certain rate of interest and the banks were supposed to "loan" our money to others and they made a profit by charging others higher interest rates.  Now it seems, thanks to the Fed's policy, the banks don't need our money and basically I was told by a manager, they don't really want it because they don't have enough people willing to take a loan!  I can understand the bank's problems but I still put the entire economical disaster at the doorstep of the Fed!
Anonymous   |     |   Comment #10
Hi All, I am 48 yrs okd--and this low int. rate enviroment just does not affect reired people BUT people of all ages. More people than not are and prefer to actually save. Saving creates extra money to spend when int. rates are "fair" and normal---people will save some and spend some and higher rates means higher amount of tax revenues coming in from int. earned. It is a very balanced approach. This low int. rate enviorment--is horrible for 100% of people--not just a few "select" group of business peopel wanting cheap money and home owners---it causes insurance rates of all kinds to sky rocket and the benefits to plummet-because insurance companies invest in concervative int. bearing accounts--and when they can't get int. on their investments--they increase premiums and bring down benefits to make up for this....horrible---including food prices and gas prices going up----rates will be forced up---later---and probably every quickly--by 2015---to make up for all the other inflation low rates will cause during these next 3 yrs--so maybe by 2015 you will see 4% again----but most people in the uSA put their money in the bank--not the stock market---that is where the middle class really put their money to grow and save--and this man ( I won't even give him the dignity of writng his name) is really going to affect the middle class---even if they do not raise middle class taxes one penny.
Anonymous   |     |   Comment #11
So my take is: the paper money becomes just a paper and doesn’t hold value against inflation. Fed irresponsible policy makes more people to get rid of money and buy gold. It would benefits just gold speculators.
Joseph   |     |   Comment #12

The petition needs to be sent to every member of congress (both House of Representatives and Senate) and it needs to be twofold

One it needs to specifically state savers are not going to put up with the Fed Pursuing long term low rates that clearly do not benefit the economy - as if they did - we would be having a major upward swing by now as we have a 0 % interest rate for three years now

Second, the poll should state how much interest income and at what AGI - interest from bank accounts should be taxed at 0 % and then subject to a maximum tax rate of no more than 15 % - this would at least put middle class Americans on par with dividends and capital gains that wealthy Americans get taxed on

We need to get this going if you don't have time find some one who does and I strongly suggest calling AARP to get the ball rolling in Washington

Believe me if Bernacke was correct in his thoughts then Japan would not be the basket case it is today and it is a basket case !!

Not to long ago everyone was saying how the "Euro" was the future and the dollar was the past - any body want to still hold to that theory ? - the implosion there came not because of our low rate policy but due to Europes mis handling of Greece for a decade not just since May 2010

In terms of my credentials i hold an MBA in Finance and a BBA in Accounting and I am saying the Fed is wrong. Just because the Central Bankers think something that doesn't make them right

The Fed's mandate should be to fight inflation not be involved with full employment - may be that should be added to the petition


Anonymous   |     |   Comment #13
I am going to help the FED's cause by buying I bonds, not a chance let them get out of their own mess.

Anonymous   |     |   Comment #15
Anony/Paoli:  Everybody knows already that the savers are being crushed, they don't care this is how it works.   They want people in riskier assets can't you see that?  Bernanke said he is aware of the savers, he is going to keep doing what he is doing he can not stop now, has too much invested. It's do or die now, better hope it's do but I have my doubts.
Anony/Paoli   |     |   Comment #23
#15  If you saw a room in your house on fire, would you just watch it burn and "hope" the rest of the house wouldn't completely go up in smoke or would you do everything you could to stop the fire from reaching the other rooms? 

IMO, it does not have to be "do or DIE" when it comes to what is happening to our economy and our interest rates.  The Fed has made some really bad decisions and it's having a horrible impact on me, my family and millions of savers.  Just because they won't "do" the right thing does not mean I have to give up and "die" if you get my point. 

I also won't just sit back and do nothing.  If Ken does not get his consensus to go ahead with the much needed Petition, I will type up my own as a letter and send it to Obama, Bernanke, my senators, and every senator who I think will be running for election this year.  This is MY country and I will DO whatever it takes to survive!  Will you??
Anonymous   |     |   Comment #16
To DaveO:The only thing that surprises me in your answer is that you really said it and the other thing that surprised me is 3 people actually voted yes for you..........LOL!

If the rates are set low by the markets I can live with that but when the FED creates money to buy are own bonds to drive the rates lowere falsely then I have a problem with that.

The ultra low rates Greenspan had is what helped to create the housing boom and bust, I can't wait to see what we get this time around.

People looking for other ways to get income back then did exactly what you say to do, they started flipping houses they bought stocks they took equity out of their homes,WAKE UP what happened, remember?

If there were more savers in this country rather than spenders we wouldn't have had to bail everybody out they could have bailed themselves out.


Anonymous   |     |   Comment #17
should have been our own bonds, so sorry.
Parris Boyd
Parris Boyd   |     |   Comment #18
The low rates are part of an overall scheme designed to help the rich - ol' Ben and his cronies are doin' fine - at the expense of savers and what's left of the middle class. Good for corporate greed, Wall Street, and our two headed one party system because Repukes and Demagogues BOTH pander first and foremost to special interests. So the petition will be a waste of time, as will voting (see my post - #37 - re yesterday's article). Also, since "(anonymous)" seems to automatically appear, I want to verify that my real name is as stated. Not to be picky, Ken. You have a fantastic website, and I commend you for all your hard work. Its just that I always give my real name when I post comments.       
Anonymous   |     |   Comment #19
Woodmen of the World offers a variable annuity that pays a guaranteed 3 percent interest rate as the fixed rate component.  As long as you keep all of your cash in the "fixed rate bucket" of the annuity there are absolutely no fees or expenses (with the exception of the annual fraternal dues of 12 or 15 bucks..i forget the amount).


Anyway, you must keep it for 6 or 7 years and then you can totally cash out.


I just read the prospectus and also bombarded not only their sales person but the Woodmen Financial Services headquarters office with questions to clarify all i put above.


I think it is a good option for savers.
lou   |     |   Comment #20

Thank you for doing this. I think if we are going to have a petition it can't just state a bunch of ideas tinkering around the edges which will not really solve the problem. The problem is the Fed Reserve and the dovish members appointed to the Fed who are pursuing a zero interest rate policy which is detrimental to savers, seniors and ultimately to our country. We need to demonstrate our political strength to show that we will vote out of office politicans who support the FOMC. We need to demand that they will not vote to renominate Bernanke nor confirm him. I also think we should request that in order to receive our support that we want them to sign a petition requesting the resignation of every member of the FOMC who supports the current policy. We should let them know that savers and seniors vote more than any other demographic group in the country and have the political influence to decide the elections in Nov.

Essentially, we have to demonstrate our political strength and be prepared to exercise it in order to force the Fed Reserve to change the ruinous course they are on. Trust me, politicans understand the political might of seniors and savers and if they really feel they will lose their support, I think we will see the type of change necessary to remedy this dysfunctional monetary policy. So we need  a petition for the politicians, obligating them to call for the resignation of FOMC members supporting the zero interest policy and committing themselves to vote against the nomination and confirmation of Bernanke.
RJM   |     |   Comment #21
"When rates are low...stocks will grow"

I think Im going to put more in stocks. My value style may be somewhat out of fashion now with rates so low.

Maybe one should pay a 15 PE whereas in the past, I wouldnt pay over 10 ?

a 15 PE is a 6.67% earnings yield.

Sure, theres risk. Life has risk.  Tornados hit within 1/2 to 3 miles of my house recently and tore up areas worse than anything I ever saw in person before.

Ritamarie   |     |   Comment #22
Definitely a petition is a good idea.  This may sound a little odd, but I think that petitioning Obama would not help.  He is part of the problem (and I say this as a lifelong Democrat).  And the Fed IS the problem.  Since another commenter mentioned that all of the candidates competing to be the Republican nominee in the presidential election would like to get rid of Bernanke, I suggest that we petition the four current Republican candidates.

What would we ask for?  That they publicly express support for "savers" and that they develop and present to the media -- who follow them like bees after honey -- ideas for ways to improve the situation of the suffering American savers (that's us!).  Romney should love it, because it allows him to be on the same side as someone with only $5,000 in a savings account.  And Gingrich will love it, because it gets the attention off his infidelities.  It's something positive they can all get behind and compete to come up with better ideas.

Not only seniors are savers.  People of all ages want to be able to put a little aside and get a decent return on it.  And we are all voters.  It could work. And if it makes Obama nervous, that would be good too.



Anonymous   |     |   Comment #24

I meant do or die for the economy, another words I am saying that if the economy doesn't gain traction now with all they have done then we are going to back into a recession and it won't be pretty that is the die part.

You should do whatever you want to it is your right all I am saying is it will be a waste of time. I used to send emails to Obama and Bernanke daily, as you can see it did a lot of good. If it makes you feel better, by all means do it.

I have 75% of my money in CDs so if you think I am happy you are very wrong.
Anonymous   |     |   Comment #25

#15 expressed HIS/HER opinion...let it go at that, if you can? Meanwhile, lets try to work together, will you?
Truthseeker   |     |   Comment #26
A petition will accomplish little to nothing standing alone.You are competing with Goldman Sachs and JP Morgan and the other casino banks, who all suck at the federal teat, and are dead-set on more money printing and giveaways to themselves from their slush fund, the Federal Reserve.  They contribute millions to political campaigns.  It would be much more effective if savers gave their money to Ron Paul, and if a gold standard were enacted into law to prevent dollar printing and debasement, so that the Fed were forcibly closed, and its irredeemable paper emissions eliminated.

Savers should become politically active, but two problems exist.  First, they tend to be so conservative and cheap with their money that they will not make the political investments needed to influence politicians.  I am talking about political contributions, attendance at political dinners, etc.  Over 99.9% of savers will not contribute a penny to any political campaign, and it is this passive cheapness that makes them penny-wise and dollar-foolish.

We are entering a age of financial repression.  Even if savers were politically savvy, the debasement of the US dollar and artificially low savings rates amidst high inflation rates is an inevitability.   That is why the government continues to lie about inflation (see, www.shadowstats.com), and will increase its lies as the true inflation rate, which was 10.7% this month and 11.2% last month, continues to explode. 

Financial repression means that the Fed is going to continue to buy bonds, flooding the market with newly printed dollars to do so, and debasing the dollars that already exist.  They will also periodically attack real money, which is metal, in order to prop up confidence in their paper Ponzi scheme.  But, the end game is to inflate debt away, both for irresponsible governments and big casino banks, like GS and JPM who owe trillions in derivatives obligations.

I told you all to buy platinum, or gold and silver, when they were inside an artificial manipulation event.  You could have bought platinum for $1,320 per ounce just a few weeks ago.  Now it is over $1,600 as the manipulation event unwinds.  It may get hit soon by another manipulation event, which will give you a second change, before the end of March, but over the next three years, it will sell for $3,000 plus, because paper money is being debased.  Gold will eventually sell for $5,000 per ounce.  Silver for $150.  Your long term CDs are going to wipe you out in an environment of high inflation.

This is an excellent site to search for the best liquid accounts, but only fools buy CDs at these low rates, amidst the highest true inflation rates in years.  I wonder why I bother writing these posts here?  Few if any of you will listen.  Most have blinders on, and that is why you will always be the victims who will find the value of their money stolen from them by savvy crooks like the boys at Goldman, under color of law.  But, even if I help one or two honest savers save themselves and their families from financial ruin, it will be worth my time. 
Anonymous   |     |   Comment #27
#26 - Down deep, and in large part, I tend to agree with you, yet I need the interest from my assets in order to currently survive.  What a dilemma, huh? I have almost came to the conclusion though, to invest at least 10% of my assets in gold, since the interest on that amount is measly anyway. Good luck to us all and keep 'pounding' it in.
Dan   |     |   Comment #28
I'll sign it, just show me where.
Anonymous   |     |   Comment #29
i totally SAVERS STAND UP AND FIGHT <I WILL SIGN ANY PETITION TO STOP RAPE OF SAVERS < BERNANKE SAYS ITS FOR THE OVERALL GOOD ,what he really means its for his good, i am voting for newt i dont even like the guy but he said would fire this idiot bernanke ,savers are the good people we deserve at least 3 percent one year cd
Joe   |     |   Comment #30
lifelong Democrat here, voting for Gingrich if I can.  Just mailed his campaign a $100 check.  My first political contrib. of my life and I'm 62.  Just sick of being sold down the river by the current bunch, who my wife and I voted for.  We all need change BADLY. I don't care about the guy's marital issues, look at JFK and FDR.  I care about what he will do to turn this nation around.
Anonymous   |     |   Comment #31
I actually brought up this topic over 2 years ago of need for protest and lobby govt. officials about the plight of savers and how the Fed failed strategy for economic revival rested squarely on the backs and bank accounts of innocent savers.  The comments of those on this site were anything buy supportive of this cause, which at the time, made no sense to me. I still think that we need to write and call our elected officials protesting the Fed's failed policy and seek an immediate reversal.  I am not saying that it will guarantee a change in Washington, but if enough people complain, the squeaky wheel usually gets the oil. 

On another side of this issue that has been brought up by many on this site, there is a pervasive thought that Republicans will make a change in the current Fed policy and replace Bernanke.  I would like to remind you that this mess started long before Obama took office, and if Bush admin. didn't protect the interest of savers, how in the world do you think that the current slate of Rep. candidates will do any differently.  I am actually a registered Rep. in the state of FL, and I can tell you that there is not one current candidate that I could even remotely support for President.  And I am really angry at the Rep. National Commitee that is blasting registered Rep's in our state with computer generated calls about the candidates and surveying our intended votes. We have been signed up for the National No-Call program yet it has no impact on all these unwated political calls we have been getting every day. And if we hang up, they keep calling and calling and calling.....   What a waste of money and our time!!!
Anonymous   |     |   Comment #32
The idea of a petition sounds great !

To Anon #9 - Back up a little bit to how interest rates got so low--not by market forces but by deliberate actions by members of the Federal Open Market Committee of the Federal Reserve led by Ben Bernanke to ensure that interest rates would go low and stay low.  "Fixed" markets are not part of our so-called "free markets" economy called capitalism!  Not too long ago at an earlier press conference last month or earlier, I seem to recall Bernanke mentioning something to the effect that since Congress and the President won't do anything legislatively, he will have to basically carry the ball and do what he thinks is needed to spur economic growth.  I remember his answer at a news conference when questioned about the effect on savers, he said something like --- I hope they know it is for a greater good --- reminding me of Obama's redistribution ideas.

To the commenters who tell savers, you're stuck with low to no interest and the banks don't need your money, I reply -- Then why is Chase after customers  to deposit funds in a liquid account at 1% guaranteed for 3 months?   The answer is that the big banks need funds in order to meet "capital reserve requirements." 

I like anon#20's idea of a pledge from Republican nominees to call for resignations of FOMC Committee members.   Things like this will help "stir up the soup" by keeping the subject in the news and in the minds of voting Americans.
Anonymous   |     |   Comment #33
My suggestion would be to direct the petition to the President and each of our congressment.  We could entitle it:

 "NO INTEREST ON SAVINGS = Less money from investments = less spending = less taxable income = less tax revenue." 
Senior Citizen
Senior Citizen   |     |   Comment #34
It is really very simple.

Even if Obama fires Bernacke (ain't gonna happen, folks), as long as Obama is there, he will appoint someone else as bad or worse!

So we must pull this devil out by its roots and fire Obama!
Anony/Paoli   |     |   Comment #35
Ken:  If you want what really needs to be in the Petition, "Lou" #20 has given it to you.  The politicians may need the big bucks to run for an election but they all know whether we give them money are not, they need our VOTES!   If we drop the ball now while they have an election coming up, we lose our biggest chance, imo to get them to take us seriously.  At least a Petition will let any one who takes office know that we are not going to let them do this to us without fighting back!  They have to know we have the numbers to vote them in, or "out" of office! 

I think if some of us will back up the Petition with personal letters or emails to Obama, Bernanke, our senators etc. with the basically same message, it can make sure they know we are serious.  That is what I intend on doing but I want to do it about the same time we put up the Petition so I hope we don't let this die on the vine.
Rosedala   |     |   Comment #36
This is very simple math - if we do something (I think petition is the best), we KNOW that we may or may not get results.  If we do nothing we KNOW nothing will happen! 

As Ken suggested, the petition should be concise but very clear and impactful.  If there is anyone who can do this correctly...it's only Ken!!!  I've signed well made petitions that did achieve their goals...although the causes were very difficult and UNpopular. 

So...as soon as the petition is ready I'll also forward it to my 2 lists in the hopes at least some of them will sign. 

Good luck to us!  :o)
Grace   |     |   Comment #37
Ken, great idea. Thank you so much! I feel the most practical thing is petitioning the president to raise the purchase limit on I bonds and to tie the inflation component rate to a more realistic inflation index. We are so fortunate to have someone like you helping us. *hugs*





me1004   |     |   Comment #38
Very good to do, very long overdue. Yes, do this, I will support it -- even as my pessimism overwhelms me. I suspect that no matter what is called for, the actual results of this will be to hopefully raise it to a significant part of the national discussion. But I don't foresee anything actually coming of it any time soon. The BoA petition and the few other similar petitions worked and quickly so because they were dealing with a hard and fast specific and contained issue with a definitive point of control. As Ken already expresses in this article, that is not the case here, who would we even direct this to, much less who can do anything? Unfortunately, there is no right, magic answer to that -- and thus, the request for suggestions.

Because of the lack of any specific answer here, I suggest it be directed to all members of Congress and the President. Not to worry, Bernanke will hear about it, does not need it directed to him. If anything, the other board members would be more likely to change. No one can make Bernanke do anything in particular, and I'm afraid he has too long a history on this topic, going all the way back to his doctoral thesis -- as they say, you can't teach an old dog new tricks. Bernanke has been waiting his whole career to do just this! 

But directed to Congress means anything that does manage to get going will move at the snail's pace at which everything Congress moves. So, nothing will be done any time soon. But we don't want to be sitting here in another year -- or two -- and wish we had started now. 

There are so many variables in play here. For one, any tax cut for savers -- hey, they are under very severe pressure to cut the deficit! Thus, what else in the budget do you want cut to make up for that tax cut? There are so many things. How about cutting the tax writeoff for interest paid on mortgages? Well, then, you will have to consider whether you get anything out of a savers' tax break if your other taxes go up for lack of the mortgage tax break. But let's face it, it is mortgages that have gotten the big benefits here and maybe they should pay the rest of us back. Still, eliminating that one tax break would not be enough to make we savers whole.

I don't have a specific proposal, at least not at this time. I think other than the Fed changing direction, which I think is not obtainable any time in the near future, that anything else will turn out to be little more than window dressing, just some peanuts. Hey, if peanuts is all that comes down, I'll take it -- but I won't feel whole. 

Still, I'm afraid if this does not go big now, we will face many years of low interest rates -- more than anyone has contemplated. Without elaborating too much, they are STUPIDLY allowing EVERYONE to refinance their 30-year mortgages at around 4%. Well, if banks are locked into the next 30 years of income at 4%, how ever will they be able to give we savers 4% or 5% on our savings -- they make money on the difference, and everyone locked into 30-year 4% mortgages does not spell good for savers for a long time. They should have limited refinancing at such rates only to people in foreclosures if they wanted to save them, not let everyone have unsustainably low rates. The banks will not be able to give us 4% five years or even 10 years from now if that is only going to bankrupt them, have more money going out than is coming in. Frankly, this could become a far greater problem than what we are discussing today. This is the longterm damage Bernanke's policy's are cementing.
Diane   |     |   Comment #39

Would definitely support the return of the Pre-2008 Savings Bond Annual Purchase Limits![/H2]

Hal,  Lake Forest, CA
Hal, Lake Forest, CA   |     |   Comment #40
My wife and I are seniors who planned to retire with our social security,  retirement account, plus a 4% return on our savings which was 19% of our planned retirement income.   I think we need to include AARP and the President due to the senior voting clout , and the unfairness of our government(Federal Reserve) to give the banks a reason not to pay it's depositors a fair rate when the Federal Reserve is allowing them  to use our money on deposit for bank profit and allow them to borrow   0.00 to .0025% rate.  If the banks are using our money and the free loans from the Federal Government then maybe the Federal Reserve should require the banks to pay a minimum rate to its depositors for the dual use of the money.  I am not eligible for any free laons but I am entitled to a fair return on the money I have on deposit.
Anonymous   |     |   Comment #41
Hal:  About a year ago, I was having a conversation with a director of my local bank about a deposit I wanted to make but their rates were already lower than others.  He told me they really didn't need our deposits because they could get all the money they need practically for "free" from the Federal Reserve.  I called the Fed and was told the banks had to meet certain criteria to get their money.  This was "before" Bernanke dropped us to "zero interest".   Recently I was told by a bank manager from a different bank that he really couldn't use my deposit unless I was bringing in with me someone who also wanted a "loan".   If they can't make money on our deposits, they can't pay us decent interest. 

Now things have gone straight to Hell with the Fed's latest moves.  The sad part is that it has backfired on the Fed since things are so bad people are afraid to take out loans and the "spending" they wanted to see is not occuring.  They don't seem to care that they have destroyed a lot of the spending retirees would do if they had decent interest rates.  That makes too much common sense!
Truthseeker   |     |   Comment #42
This idea of voting for Gingrich to evoke "change" is nonsense. There is only one candidate who will help savers, and not because he particularly wants to help savers, but, rather, because his policies will be to close the Federal Reserve, and to force banks that are irresponsible to close their doors.  That candidate is Ron Paul.

If we were on the gold standard, Bernanke could NOT print unlimited quantities of free money for banks, and they would need to compete in the free market for our savings.  That would mean cash would be King again, as it should be.  Prudent people would have the opportunity to buy assets from imprudent people, at times like this, for pennies on the dollar, as it should be.  And, power would shift from irresponsible management to responsible management.

Forget about Petitions, and do two things instead.  Give a contribution to Ron Paul's campaign in as big an amount as you can afford, and vote for him.
Newbie 1
Newbie 1   |     |   Comment #43
I will sign a petition.

I think it should go out to all in the Senate and Congress, to the Republican candidates  and also to Obama.

Hal, Lake Forest, CA  Anonymous
Hal, Lake Forest, CA Anonymous   |     |   Comment #44
I will sign a Petition. 

 I believe it should be sent to the President, Congress, and to AARP, who has lobbied well for senior ciizens and fairplay.  We would be wasting our time talking to Bernanke.  He is real good at spending other peoples money with no return.

#40 Comment
Anonymous   |     |   Comment #45
Hal:  I wouldn't put too much hope in AARP.  We have been members since practically day One and I have written to them about certain issues without any help or positive input.  However, if they know a web group like this one is planning on "spreading the news" they may decide to write up a report on the problem in all those magazines they mail out to members.  They may not like our advertising that we approached them for help and they ignored us.  It's worth a try, imo.
Anonymous   |     |   Comment #46
The FED is pushing on a string.  They are also punishing prudent savers and retirees by keeping interest rates below the true market rate.  Shameless!   
Inforay   |     |   Comment #47
As long as Ben Bernanke is in power, and I feel he is more powerful than the President, interest rates will continue to be low.  Last time he pledged they would stay low until 2013, now it is 2014.  He is operating the stock market like his own personal hedge fund.  If you notice, the ninute it drops by some points, action is immediately forthconing, so that it goes back up.  If a private individual did this, he would be prosecuted and imprisoned.  But Bernanke is cloaked with governmental immunity.  How this country got to a point where one individual is given so much power over the lives of so many, is beyond me.  Ken, we will be happy to sign your petition.  Please put it out where we can do so.  Thank you for your phenomenal service to savers like me, who had believed we could retire on our interest income by laddering CDs but have seen our dreams go up in smoke.
Anonymous   |     |   Comment #48
Can Fed rates go lower than "zero"?  By the time we get a Petition up and signed we may have lost all our leverage to get "anybody" to rethink this insane Fed policy.  Can someone direct me to which post I can find this Petition?  Thanks!
Scott White
Scott White   |     |   Comment #49
I'm looking at junk bonds (i.e. ticker : JNK), REITS, and Dividend Stocks. I think I will still keep 50% in cash account. really hard to figure out what is best.  I would love to see those 4=-5% CD back.  I would be all in for as long as I could be/  I would also sleep better at night.  I hate stocks but that may be my only option to reach my goal of retirement in 8 years.   
Anonymous   |     |   Comment #50
I agree the AARP should be involved.  They advertise and justify their existence to stand up for the "Seniors".  Recently, I called the AARP and asked what are they doing to help the seniors with the problem of low interest rates. They couldn't tell me anything.
futuresynthpop   |     |   Comment #51
I'm on board. That's what 'for the people by the people' is supposed to be all about, right? I like that the post that they forget the 'saver's and just go after the votes of the 'borrowers'. Well, the savers are growing in numbers and we need to be heard.
EdG   |     |   Comment #52

    I support your petition to increase the max contribution of I Bonds. I have already max'ed out my and my wife's contribution for this year. 

    I don't beleive the current Congress can be constructive in this and most matters.

    I beleive a change without Congress is a superior solution.

    I would gladly sign this petition.


Ed G
Anonymous   |     |   Comment #53
As long as the Fed is pledging to keep interest rates low, pressure needs to be exerted on congress by the retired constituents. But since Congress responds only to powerful lobbies,  baby boomers need their form their own lobby in Washington to pressure members of congress to help retired Americans. We need an organization dedicated to restoring the retirements of hard working Americans.
Anonymous   |     |   Comment #54
Ken.  Are you putting together a petition???   We have a voice in congress.  It's the AARP.
Anonymous   |     |   Comment #60
#54  Is your post about AARP a joke?  If you didn't know that we have been pleading for Petition signers for months, you must be new to this group.  Yes, Ken has a Petition and we would be grateful for you to sign it.  As for AARP, many of our posters who felt they were useless to us for our Petition were right.  I contacted "every" chapter in my area and only one would even allow me five minutes to go to a meeting and mention the Petition.  The others "we don't allow that type of stuff" was their answer.  I have written Letters to the AARP Editor, to the President, and the Petition writer has posted our Petition url on practically every AARP article. I did the same and also tried to get a message in the AARP Magazine to promote us.  WE are longtime members of AARP and this is the first time I have ever tried to get their help.  What a disappointment!  I have used Twitter to tweet to them for help but it was useless.  Don't get me started on AARP.  You want a nice discount for a vacation?  That's about all they have been useful for to us.  If you have any AARP connections, please prove me wrong and ask them if they will promote the saver's Petition.  You can find the url for it on the Petition page Ken was kind enough to allow us to us for the Petition.  Thanks for any help you can provide.
Anonymous   |     |   Comment #61
#54  If you are interested in signing the Petition this is the url:



Thank you.
Rosedala   |     |   Comment #55
If this gangster administration continues in power after 2012...we may even have to pay the banks to hold our savings... :o(   
dznews   |     |   Comment #56

I was glad to find this website.  I do not feel that a petition for a change in the tax rate on interest income will address the burden on savers at a time when they are really suffering an onerous “rent control” policy on the use of their money.  I believe this rent control policy had resulted in a stealth tax of incredible amounts unfairly in assessed and collected.   I feel that taxation without representation is the issue.


ING, a financial services company, is still running their commercial, “What's your number?”  The television versions of the ad show wise clients carrying around their number placard printed with their retirement goal amount, none shown is less than $1,000,000.  The product ING is promoting is retirement investment and planning services.  


Enter our twilight zone where one Mr. U. S. Schmuck, a single man, was downsized but ready to retire in January 2007.  He had achieved his “number” ($1,000,000) and at retirement put it in CDs with tiered maturities.  In 2007 it appears there wasn’t much of a yield curve so for this sad tale, he invested $200,000 each in a 1 year, a 2 year, a 3 year, a 4 year & a 5 year CD, all with about a 5.5% rate of return.  His thinking was that he would have about $55,000 a year for retirement from his savings.  Deferring Social Security to at least full retirement age, his 2007 income is the $55,000 and he pays Federal  income tax of (single filer, standard deduction) for an effective tax rate of 14.5%.   In January 2012 the last of his 5.5% return CDs matures. He has replaced each maturing CD with a new 5 year maturity certificate which keeps the maturity date tiers the same but the certificates themselves all have the longer maturity rate of return for a 5 year CD.  His income dropped about two thousand the first year, another $2,500 the next, then almost $7,500 in one year, about $6,700 the next, almost $7,000 in 2011 and in 2012 his income will be reduced yet another $5,500.  His retirement income from his same investment, his same “number” will be only $22,100 in 2012 (moved back in with his elderly parents to avoid reducing principle?).  Given the Federal Reserve control of the rate of return on federally insured savings, was the annual change in Mr. Schmuck’s standard of living due to a loss of income or an increase in taxes?  Mr. Schmuck’s estimated 2012 Federal  taxes will be $1,266 on $22,100 (assuming $3,800 personal, & $5,900 standard deduction) plus the stealth tax of $32,900 ($55,000 - $22,100) for a total 2012 tax bill of $34,166 and an effective tax rate of 62% (on $55,000). 


My input for a petition is for a document that decries taxation without representation.   The “rent control” being enforced by the Federal Reserve amount to taxes levied without input or vote by an elected representative.   Reducing taxation on interest income will no way address this.  Mr. Schmuck’s money was taxed at the Federal Reserve level.  The IRS and the legislative branch of our federal government are not players in the determination or collection of Mr. Schmuck’s federal taxes.

lou   |     |   Comment #57
Mr Schmuck is a victim of financial repression, or the Fed policy of keeping interest rates much lower than inflation. Hopefully, Mr. Schmuck will vote out the incumbent Presidential gang, so the current Fed mobster (Bernanke) wil have the opportunity to go back to his ivy league school with Krugman and the other wacko academics who have no understanding of the real world and where they can do no harm.
Inforay   |     |   Comment #58
Lou, you expressed my sentiments exactly!  I cannot stand to see Bernanke or Krugman when they appear on television.  I think Bernanke is completely self-serving; probably has a bunch of money in the stock market and so engages in every shenanigan possible to make sure the stock market keeps rising.  Notice that if it drops for even a couple of days, there will be some action to bring it back up.  This is all done at the expense of us, savers, who regard the stock market as a sophsiticated casino. These are the worst type of mobsters because they have government sanction for their actions. Wonder why Bernanke has so much power?  He testified before Congress that his son will come out of medical school with $400,000 in debt.  I managed my son's finances so that he graduated from medical school with a total debt of $48,000 in 2011.  What does that tell you about Bernanke's financial prowess?
Anonymous   |     |   Comment #64
Any news about increasing our savings interest
W.jr   |     |   Comment #67
Ken, i was searching for upcoming interest rates and landed on this post. I couldn't hold me self to complete this article. I like the idea of petition but again it is not a one man job. If we want change, we should do it as one power. Good guide. Let me contribute in it by sharing a reference for petition templates which i believe a good tool for this guide. here: https://www.wordlayouts.com/petition-templates/
!!!   |     |   Comment #68
Repllying with a comment to a 2013 article? More than a little late. A lot of things have changed since then, including the President and the direction of our country, thank God.
W.jr   |     |   Comment #69
Yeah! but still many things to change. Unity.