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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Rep. Campbell Talks With DepositAccounts.com on the Risks of the Fed's Monetary Policy


Rep. Campbell Talks With DepositAccounts.com on the Risks of the Fed's Monetary Policy

Last week my article covering Fed Chairman Ben Bernanke's testimony before Congress was picked up by the office of Congressman John Campbell (R-CA). I thought this would be a good opportunity for us to connect so I can learn about Congressman John Campbell. Also, it would give me a chance to offer him some insights into the conditions savers and retirees are facing under this never-ending ultra-easy monetary policy. I emailed his office, and they agreed to a short phone interview.

As I mentioned in the article last week, Congressman John Campbell is the chairman of the Subcommittee on Monetary Policy and Trade. He gave an opening statement before Fed Chairman Bernanke's testimony. It detailed seven risks that Congressman Campbell believed are "exceeding [the] now meager benefits of the current monetary policy." His fifth risk involved savers and retirees:

Number five is that savers and retirees are being forced into riskier assets in the search for some sort of yield. When this unwinds, that is going to be a problem for our savers and retirees. We all in economics learned early on as you get older take less risk but now what we find as people get older they are having to violate that principle and in search of some kind of yield are taking much much greater risk which could be a problem in the future.

My phone interview was held on Monday. I informed the Congressman that many DepositAccounts.com readers feel that the current monetary policy is essentially bailing out large banks, the government and those in debt on the back of savers and retirees. I asked if he thought this was a valid point. The Congressman said that it was. He continued by saying that when Chairman Bernanke started, there was concern about deflation. The Congressman said he supported the Fed's monetary policy for awhile to cover for the lack of fiscal policy and to ensure liquidity to prevent the U.S. from slipping into deflation. But it has been going on for so long that "the negatives outweigh the benefits."

In my last question to Congressman Campbell, I asked if anyone has requested Chairman Bernanke to cite studies that quantify the loss of income to retirees due to the current monetary policy. As we saw last week, Chairman Bernanke often downplays the loss based on anecdotal evidence. The Congressman thought this was a good question that has not been asked, and he agreed to pursue it.

From my interview with Congressman Campbell, it's clear that he is concerned about the risks of the current monetary policy. Many of those risks like high inflation have the potential to greatly harm savers and retirees. I appreciate how the Congressman is trying to make sure the Fed pays enough attention to these risks. Chairman Bernanke and others at the Fed may be aware of the risks, but are they doing enough to guard against them? An ounce of prevention is worth a pound of cure. Let's make sure the Fed and our government leaders work hard to manage these risks now.

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51hh   |     |   Comment #1
Good for you, Ken.

Hopefully through this interview the Government (in this case Congressman John Campbell) is more connected to the cold reality that American people are facing every day. 

From my perspectives, they certainly live in a fantasy realm that is totally disconnected with ours.
scottj   |     |   Comment #2
Good job Ken on keeping them thinking about us savers. I really believe many don't care about us, they think of "savers" as the lucky ones who at least have money and our not living paycheck to paycheck. 
Anonymous   |     |   Comment #3
One of the craziest aspect of the whole debt-monetizing game is the stock-specumarket's reaction to the policy. Most economists would probably agree that in all reality, the Fed has actually pretty much run out of bullets that are effective to relieve the country's present economic condition, contrary to the the hype from those associated with policymaking or the financial sector. So, regardless of the real effect of the current monetary policy, whenever the Chairman arrounces anything similar to a continuation of the present inneffectual policy, the country is treated with cheers from the specumarket boys and girls. When will the reality of things settle in with policymakers in this country that we have some systemic conditions to tackle, not a situation whose main illness calls for monetary policies of the current ilk? 
ytyt   |     |   Comment #4

Dear Mr Tumin,

I have comments/questions about the risk cited by Congressman John Campbell.

>> Number five is that savers and retirees are being forced into riskier assets in the
>> search for some sort of yield. When this unwinds, that is going to be a problem for
>> our savers and retirees.

Who is this "saver"? 

(1) Assuming that the "saver" a person who has 100% of his/her assets in FDIC/NCUA insured account.

If this is the definition of a "saver", then perhaps the risk cited by the Congressman has more to do with the "greed" that the saver acts upon and moves into riskier assets.  The so called force is actually an explicit decision made by the "saver" to abondon the FDIC/NCUA insurance, and embrace the riskier asseets.  Noone is holding a proverbial gun to the "saver's" head and forcing him/her to abondon the FDIC/NCUA insurance.

(2) Assuming that the "saver" a person who is not a "speculator" or a "trader" who is able/willing to assets rapidly, but a person who has some assets in FDIC/NCUA insured accounts, and some in (say) Stocks/Bonds/Mutual-Funds etc.

If this is the definition of a "saver", then it is reasonable to assume that such a person is already well aware of the risks involved, and will take the risks willingly, and again will not be forced to do anything that he/she does not want to do.

The fact is that "saver" is a made-up term.  There is no clearcut definition for a saver.  Unlike something clearcut like a person eligible to Vote and person not eligible to Vote (minor,alien,felon), a person who is Employed and a person who is Unemployed, A person who is Retired and a person who is not Retired. Therefore posing questions about something that is not crystal clear to start with, is likely to result into fuzzy/unsatisfactory answers.


Next the "retirees".

The dual mandate given by Congress (of which Congressman Campbell is a member) to the FOMC covers the "Unemployed" people.  By definition the "retirees" are not "unemployed" hence must not be of concern to the FOMC.

Perhaps the Congressman needs to answer few question on his onw first:

(1) Why/how the FOMC should be concerned about the (so called) savers and the retirees? 

(2) Does the Congressman possess any factual details where his constituents were "forced" into riskier assets?  (Is his reference to perceived risk merely a hypothetical matter or is it evidence based with solid statistically significant factual data?  If it is based on some factual data, is the Congressman willing to publish the facts?)

(3) Congressman states with certainty "that is going to be a problem".  Does the Congressman disconsider the possibilty that gradually the employment  will risk, and gradually the FOMC will tighten thereby there will be "no problem"? 

Yours Truly,
- Anonymous
Kaight   |     |   Comment #6
Well done, Ken.  Thanks.  I'm afraid our needs and priorities will remain off the Fed's radar screen.  Certainly this is true so long as their efforts to inflate the stock market continue to bear fruit.

You know, it's funny.  Over the years I have heard so many criticisms of "managed" economies, e.g., Red China.  Now I'm living in one!  The pampered banks are too big to fail .  But when we prudent savers go belly up economically, nobody will give a ****. 

Moderator: Removed phrase that adds no value and may be considered offensive.
Anonymous   |     |   Comment #7
The bottom line is that when the interest rate that one gets on one's money are not at least as high as the inflation rate, then the person holding said funds is subject to negative real interest rates on their money.  This is tantamont to a wealth tax.  It is not right.  One should at least be able to preserve the value of the money that they have worked hard to obtain.  Otherwise, the government is simply skimming (stealing) a slice of your money every year that goes by.  People that dont have much savings may think that this does not affect them, but that is not the case.  By increasing the money supply way beyond what the economy needs, the price of everything goes up.  If one takes time to notice the price of gas and grocieries it will immediately be obvious that net result of easy money.  Also wages never seem to keep up with this inflation.  So the net result is that most people see a constant steady erosion of their buying power and thus standard of living.  Its an insidious form of theft, like very slowly cooking a frog to the point that when if finally notices it, its then too late.  Everyone has a stake in making sure that monetary policy is fair and responsible.  Keeping interest rates too low too long by manipulating the bond markets only prolongs the inevitable and increases that pain that will be felt when all asset classes collapse once their respective bubbles burst.  The only reason that the stock market has obtained such lofty values is because bonds and interest from banks stink even more.  Once interest rates go back up, all these asset classes will come crumbling down.  There is no free lunch and the price we will all eventually pay will far out-weigh any temporary and fleeting gain we see from printing all this excess money.  Lets all hope that something is done soon or it will only get that much worse.
Shorebreak   |     |   Comment #8
I wish to thank Ken for conducting the interview with Rep. Campbell and pointing-out to him the plight of savers under the grievous ZIRP of Chairman of the Federal Reserve Ben Bernanke, which is merely the greatest transfer of wealth in history. Hopefully Rep. Campbell takes the bull by the horns the next time Chairman Bernanke appears before the Subcommittee on Monetary Policy and Trade, and thoroughly grills the Chairman on specifics regarding the effect the ZIRP has really had on prudent savers, particularly senior citizens.
ytyt   |     |   Comment #9


Dear #7,

Mostly I agree with your comments! The disagreement I have are the many places where you comments indicate a certainty about the future.

Is there a probability (no matter how small) that this situation will be get resolved gradually? ... Gradual pickup in housing-market, gradual improvement in job-market, gradual/slow rise in inflation and in response a gradual/slow tightening by the FOMC.

During the Republican administration under President Bush, when the need to save the system was dire, the US Treasury (under Secretary Paulson) and FOMC (under Chairman Bernanke) acted to save the system.  The need to save the system is not there, but the large unemployment has lingered from the Republican to Democratic administration. 

The most needy, so far as I as can guess, are the unemployed who are not worried about if their money in the bank is keeping up with the inflation month-after-month, but rather their worry is will they have any money at all in the bank in the first place.

If we let the unemployment problem remain then that (I guess) poses a risk that far outweighs any risk that the iinflation poses.  According the BLS the inflation is relatively tame.

In short: Big unemployment is present danger, and big inflation is future danger (if at all).

Yours Truly,
- Anonymous
Anonymous   |     |   Comment #11


ytyt =    blo·vi·ate  

Talk at length, esp. in an inflated or empty way.
Anonymous   |     |   Comment #12
Yt, I agree one can not be certain about the future, but one can be perceptive about what has already taken place and have a reasonable idea about what will transpire in the future if not the exact timing based on how similar things have unfolded in the past.

I agree that the sole priority of the central bank is not to make sure inflation stays in check at all costs, but neither should it persue policies that try to promote low unemployment to the exclusions of concerns about inflation.  The main reason that high unemployment is persisting is low demand for goods and services.  Its not that people don't need or desire to spend money.  Its that the money that they do have is not enough to buy the things that they need and want to have.  If on the whole most of the population, even the ones with jobs have their spending power eroded by inflation, then over time the aggregrate demand for goods and services will diminish.  If you notice one reason that so called "core" inflation has consistantly been lower than headline inflation is that the price of energy and food are excluded from that measure.  The price of energy and food have more influence from global demand and the relative value of the dollar against other major currencies.  So even as US demand for energy and food has gone down, their prices have gone up leaving even less money to spend of the other neccessities and fineries of life.  Business that supply these other goods and services respond to the lessening of demand and simultaneous increase of costs by trying their best to hold prices down, but as an every increasing pressure to their margins.  As this continues they are forced to cut costs wherever they can.  One tried and try method is to lower labor costs.  This is done by a combination of suppressing wage growth and lowering the overall head-count of those who are being employed.  This in turn lowers overall demand for goods and services in the economy because overall most people have even less to spend as businesses shed labor expenses.  Its a viscious cycle that repeates itself over and over.  This cycle will not be broken by easy money and inflation, it only gets worse from it.  There was a period in the 1970's that experienced the same thing, its called stagflation.  The only thing that ultimately brought us out of that was to raise interest rates dramatically.  Yes it was at first very painful, but ultimately set the stage for healthy real growth in the economy.  As a note about your comment of inflation being relatively tame, that is only because the way that the bls measures inflation is dramatically different than the way that it was done in the 70's.  If they used the same formulas that they did back then our inflation rate would be closer to 10%.  Please don't be gullable, most suffer from unchecked inflation.  Also, inflation is a problem we face now as well as in the future.  I also seriously doubt the fed's resolve and ability to raise interest rates in a timely fashions.  This is because the debt that the US has accumulated during this period of extrodinary easy money is so large that if we returned back to normal historic interest rates the ability to service those huge debts would next to impossible.  There is are no easy answers and no matter what course we take from here on out, there will be pain, I just hope that powers that be dont let this get so out of hand that the pain will be too aweful to bear.


Anonymous   |     |   Comment #13
Sorry to say, but yet another great thread is beginning to go down in flames primarily because of the yt effect. It would be quite a privelage to be able to discuss Ken's points in detail, rather than being sidetracked as usual by the resident kibitzer, but it just isn't going to happen. It's just not right.
Wil   |     |   Comment #14
YT: Your comment #9 is reasonable and is certainly within the realm of possibility. But admittedly, what you are described is a perfect, or at least near perfect, "soft landing." Can the Fed execute a such a "soft landing"? It is certainly possible, and I certainly hope that will be the case, for the sake of the common good. Now is it probable, since you asked about probability. I don't know . . . what helps, perhaps, is that the central banks of most of the other major economies around the world are doing more or less the same, so that the dollar is holding its relative value against other currencies. How long this remains the case will depend on which economy recovers first, and which central bank begins tightening first. What alarms some people most at the continued ZIRP is the duration of this policy; that is, the longer the monetary easing lasts, the more difficult it may be for the Fed to execute a "soft landing" with the required precision. That is not an unreasonable concern. By the way, your point about the "most needy" is well said.

Anonymous #7 and #11: I think you may very well be right. Your points illustrate, quite effectively, the potential danger that maintaining a loose monetary policy for too long will make the execution of a "soft landing" more difficult, and makes greater the probability of the Fed getting the timing wrong.
Anonymous   |     |   Comment #15
Hey Wil,  I know  you meant  #12  not 11
Wil   |     |   Comment #20
#15: You're right -- thanks for the correction.

#16: I agree, she shouldn't have put that way -- it was ill advised. I suggest giving her the benefit of the doubt and assuming that it was motivated by frustration with how the administration is so often treated with kid gloves.

YT #17: Reasonable point of view. But at some point policy makers must take future consequences of current actions into account, as best as can be projected, and to ignore the long-view is short-sighted. Perhaps the reason why our system of representative government has endured for so long is because we don't dissolve our governments with "no-confidence" votes; instead, our elected representatives are given a term of office of sufficient length so as to allow them to take actions that may be currently unpopular or even painful, but which are for the good of the country in the long run. This is what we should expect from our leadership.
Anonymous   |     |   Comment #16
The comment that Obama is too black to fail should not have been posted. This has nothing to do with color.
ytytytyt   |     |   Comment #17


Dear #12,

Once again, I agree with several points.

True ... the way to measure the inflation employed by the BLS is not perfect.  But absent any other reliable / better / pfererable measure, done by any depertment other than the BLS, we have no choice but to accept the CPI / CPI(U) etc BLS compiles for us.  Therefore, we have no choice but to agree with the numbers compiled by the BLS, and conclude that inflation is tame.  If some other indepeddent / non-partisan / reliable entity steps in to compile the inflation numbers, then I for one will listen carefully what they have to say.

Sure ... one can guestimate the future and try to take preventive actions, but that must remain secondary, with primary focus always on the current problem.  When former Secretary Paulson was engaged saving our system the apt analogy they were using is that this patient need urgent care. Bailout, TARP, discount loan window, and whatever other measures were to "save" the patient's life.  To extend that, the patient has survived, but the unemployment has paralyzed the patient.  A full cure will need 'maximum employment', which is where FOMC's mandate comes into picture!

Yours Truly,
- Anonymous
Anonymous   |     |   Comment #18
To ytyt - #4,

If you don't know who the savers are, you don’t belong here and stop being sarcastic all the times when you post.
Who made you a wooden advocate anyway, if you have something positive and good to contribute, you are welcome here, otherwise, go away.
ytytytyt   |     |   Comment #19


Dear Wil,

Yes, most of the major central banks are taking more-or-less similar actions. In fact, one British official even pondered if negative interest rate should be implemented. 

The near-perfect soft-landing might be difficult, but is it quite welcome if we have a somewhat bumpy landing, rather than a crash-landing.  Noone knows what kind we will get.  I find the steps taken by FOMC very helpful to address the present problem of unemployment. Besides the FOMC is required by law to address unemployment.  And as I've written elsewhere, FOMC has no business to address the issues retirees may be facing, and neither the issues the (so called) savers may be facing.

FOMC has laid what it will do to tackle the unemployment, and it has laid out what it will do when the inflation comes knocking.  Perhaps all of us have some suggestions as to what FOMC must do differently.  However, as long as the current dual mandate, as required by the law, stays in place, any suggestions to the contrary are not credible. I like the lawful steps FOMC is taking, and I know not everyone will like them. Expressing one's disagreement is surely a part of our democracy.

Yours Truly,
- Anonymous
Anonymous   |     |   Comment #21
Yt, I don't mean to be unkind, but I do believe that you are not being sensitive to perspectives that most who visit this website have.  It is a worthy goal that there be lower unemployment, but its not the job of the federal reserve to try and force that into being at the expense of inflation and debasement of our currency.  If you listen to fed, they themselves have expressed the limitation they have in bringing about lower unemployment.  They have stated that this would be better accomplished through fiscal policy.  It is congress that should decide what level of stimulous should be provided to the economy and it is congress that should pay for said stimulus also.  If the US did not have such a favorable standing with the rest of the world, or to put it another way, if there were better alternative investments to be made elsewhere, then the value of the US dollar would collapse under such easy money policy by the fed.  We should not take the dollar's reserve currency roll for granted and believe that we can print money with impunity.  Now is the time to shore up our finances and get our ship sea worthy while we still have this safety valve available to us.  Now is the time, but as always the temptation is to wait until our hands are forced and there is not alternative left at our desposal.  That is why I hope we are not lulled into a false sense of safety when in fact that easy money policy is literally playing with fire.  The longer we put off the inevitable the greater the pain will be.  Again, please also recognize that you are not being very sympathetic the the majority of this blog.  Most of the people of read and contribute to this blog are very concerned about the purchasing power of there hard earned money and don't take too kindly to having their money stolen from them however slowly and insidiously.  It would be helpful if you aknowledged that there are a lot of people that have be hurt badly by the ZIRP of the federal reserve.  This would be a good step to take in a cordial discussion of a very complex and ultimately devisive problem with no easy or simple solution.
Wil   |     |   Comment #23
#21: Also well said. I hope that everyone who posts here shows the same poise, and constructive attitude, as you have in your comment. Bravo!
Wil   |     |   Comment #22
YT #19: You may be right about the FOMC's steps with regard to unemployment, time will tell. It occurs to me that these steps may be the only "ammunition" with which to fight unemployment and anemic growth that we have, given the burdens of public debt and a regulatory environment that seems hostile to private enterprise. Is it enough? We can hope for the best, but maybe we should also be preparing for the worst. I think that the Fed certainly has a tough act that will require nimble timing. You are happy with the steps being taken; let's just hope that your happiness is well placed.
ytytytyt   |     |   Comment #24


Dear Wil and #21,

I'm afraid we ought to agree where we can, and to disagee where we must.

I firmly believe that FOMC's primary focus needs to be the current unemployment, which seems to be the case.  Inflation, as measured by BLS is tame, therefore it must not be the focus, which isn't.

Furthermore I very firmly believe that the laws, once made, should be adhered to by the public servants, (e,g, the dual mandate) without regards to what effects/consequences it may have.  There cannot be any second guessing by the public servants.  The law-makers including the Congressman, are welcome to change the laws that they determine to be in need of a change.

By the way, if by chance Congressman John Campbell and/or his stand-ins are reading this blog, then I absolutely want them to know my frank opinion that is completely devoid of any sympathy/sensitivity. I am not his direct constituent, but since he sits on the committee, I'd rather let him know that usage of made-up term (saver) is unhelpful. (In fact, a previous answer by the Chairman makes it clear that Chairman views the saver as a person who holds stocks/bonds etc.)

When the Congressman is questioning the Chairman, then political posturing can be one thing, but need to get the truthful answers by effective usage of words in the question can be quite a different thing. If the congressman is merely doing lip-service by showing his concern/sympathy to the (so called) savers and retirees then that's one thing. If he willing to sponsor any bill that puts such concern/sympathy into something actionable, then that's quite another thing.

I'll close by repeating the words that I started with: We ought to agree where we can, and to disagee where we must.

Yours Truly,
- Anonymous
Anonymous   |     |   Comment #25

Your statements conflict with logic and common sense. You say, for example:

"...absent any other reliable / better / pfererable measure, done by any depertment other than the BLS, we have no choice but to accept the CPI / CPI(U) etc BLS compiles for us..."

That is ridiculous. It is relatively easy, with the help of a computer spreadsheet, to reconstruct the honest pre-1982 CPI calculation by pluging the base data into the original CPI formula. Unlike the current fakery, pre-1982 CPI was based upon an honest fixed basket of goods and services. It did not include subjective adjustments like hedonics and "product substitution", which are both designed to artificially lower the rate.

If you don't want to do it yourself, you can rely on the website, www.shadowstats.com, which does it for you. The current rate of inflation is in the range of 9-10%. That agrees with most people's empirical experience shopping and paying business expenses. With downsizing of containers, and price increases combined, even that may be on the low side. The proof that the pre-1982 formula is the correct one comes from Mr. Bernanke, himself. He calls the 1970s era the "Great Inflation". Yet, measured by the same formula, comparing apples with apples, current rates of inflation challenge the higher points of the inflation in the 1970s.

You also ask  for the definition of a "saver". That is not very hard, and you are deliberately confusing the issue. It is not a "made-up" term, and a saver need not be a person who puts into government insured accounts. It is simply a person who puts away a store of money-value, as opposed to investment value, for the future. Savers are accustomed, in America, to saving US dollars in guaranteed accounts, partly as a result of reforms made after the Great Depression of the 1930s, and partly because of strong-arm tactics of the US government.

While it may be true that no one is "forced" out of savings accounts, it is only completely true if a market rate of interest on money were being paid. But, that is not happening. Savers do not receive the market rate. In the absence of QE and the multitude of Fed loan windows, from which its casino bankers regularly extract hundreds of billions of dollars, the market rate of interest would be in the range of 5-6%. But, the allied forces of statists and casino bankers don't allow market rates. Instead, a Soviet style politburo, called the Federal Reserve, has been created to allegedly "regulate" rates, and, in practice, to falsify them.

The irredeemable Federal Reserve Note version of the "dollar" is our "legal tender". The government backs up the Federal Reserve with its military and police. It forces us to use this deeply flawed currency by threatening a loss of freedom if we refuse. The owners of the Liberty dollar metal coin operation know this well. They are sitting in jail for allegedly "counterfeiting". That, in spite of the fact that the still valid law, known as the Federal Reserve Act of 1914, specifically requires Federal Reserve Notes (FRNs) to be redeemable in "lawful money". Lawful money is defined, under the act, as gold coins, or US Notes redeemable in gold coins. Redeeming FRNs, of course, is now an impossibility, because no currenly printed form of the US dollar is redeemable in gold specie.

Liberty dollar coins, of course, are obviously not Federal Reserve Notes nor can they be mistaken for them. But, this alternative currency for savers simply became too popular to be tolerated. Thus, FRN based savers, who keep assets in the form of paper money, are forced, at the point of a gun, to do so. They are forced to accept the authority of the Fed Politburo because, if they choose to distribute and/or use another form of currency, they will be put in jail. You either accept it artificially low rate, or you are FORCED to put your wealth into something other than money. Thus, savers are forced into risky assets, and it has nothing to do with "greed", but, rather, only an attempt to seek a fair return on the store of value most of them worked so hard to create.

The Liberty dollar'a real offense was making gold easily tradable for goods and services without an easy way for the statists to explain how and why a capital gains tax can be squeezed out of its users. The Liberty dollar negated the inflation tax that punishes savers of all stripes, even while making it nearly impossible for the government to justify imposing any punishment for moving out of the Federal Reserve Note system. It is a fact, well known to those who drop out, and switch to saving in gold or other precious metals, that we are forced to pay capital gains tax as the punishment for avoiding the even greater and more covert inflation tax imposed by the unlected, casino-banker dominated, Politburo (a/k/a Federal Reserve Open Market Committee).

The US Treasury penalizes "gold-savers" with capital gains tax when they use their money. Capital gains taxes on gold savers is essentially a punishment for trying to avoid intentional inflation designed by the Federal Reserve. If and when gold sells for $12,000 per ounce, it will simply be because casino bankers and statists have caused the Federal Reserve Note to decline in buying power. Prices may appreciate or depreciate in an uneven manner, but $12,000 gold in 2018 is going to largely be a function of the decline of the dollar. It will buy you little more than $1,600 gold now. In other words, gold is not rising in value. The dollar is decreasing in value. The process is simply masked by false statistics.

Gold-savers will manage to avoid the greater penalty of a prospective 9/10ths of the value of their money stolen by inflation. However, they are punished with a minimum 20% tax on their capital gain, possibly more, even though it comes almost entirely from artificially manufactured inflation, gratis of the Fed.
Ted   |     |   Comment #26
Anon 25, couldn't agree more about the "inflation rate" manipulation. I don't know how they can come up with such an absurd figure and some people, apparently, actually believe it.  I guess they cherry pick the data, and have noticed that VCRs are pretty darn cheap these days. 
Anonymous   |     |   Comment #27
I'm sorry, but you were better off talking to a busy signal.  No one in Congress is worth talking to because they are all incompetent and will only tell you what you want to hear and then do nothing.  I can guarantee you that John Campbell has already forgotten about your conversation and has moved on to being a fly on the wall.  He's absolutely powerless to make any kind of change.
Bozo   |     |   Comment #28
FYI, folks, the actionable response to ZIRP is EE Bonds, for after-tax spare funds. Hold 'em for 20 years, they double. State tax free and federal tax-deferred. Effective interest rate north of 3.5%. The real quandry is what to do in tax-advantaged fixed-income.

I've just resigned myself to a falling effective yield on my FI until RMD kicks in (smidge less than five years for us).

Don't get your hopes up on Congress doing anything. Boomers whining about low interest rates on their CDs? Not exactly a growing demographic voting block, as it were.
Anonymous   |     |   Comment #29
This country is run by liars and cheaters, from the president Obama, Bernanke, Congress and all responsible for any economic policies.
Bernanke prints money and is debasing the dollar on par with Chinese yuan  and says he had it under control by not reporting the real numbers. Monthly $85 billions are just new money put into circulations without any cover of goods or services or labor and on top of that he lies about inflation numbers and un-employment rate. He gave himself free hand to print as much as he wants for as long as he wants.
I don’t know about your definition of dictatorship, but in my book, we already live in a deceitful society under full control of few people. Senate already gave free hand to Obama to run the country and the house under Boehner  plays dead on arrival policy and contribute to the above destruction of our country.
Artificial stock market and artificial interest rates goes against a free market system and such conflicts will just enlarge and will create collapse of the economy. There is limit of  how much you can fudge the numbers around, but this is beyond belief and down right criminal.
Anonymous   |     |   Comment #31
#29:  How I wish what you were posting was just pure nonsense but after listening to our so called Congressmen on Tv concerning how they just can't get any help or answers from the President on coping with the deficit, I have to be concerned that you may be right.  It's like we are being "set up" to collapse and no one in Washington has the power or cares enough to stop it!  Many of the congressmen state they ask for help or answers but don't get any.  I am so tired of writing to my Senator.  How much further will they allow our currency to lose more value before they say "enough is enough".  I think they won't take citizens seriously until we are in the streets revolting against a government we no longer recognize.  The Constitution has become a mockery for certain leaders who feel no need to abide by it.  We desperately NEED a real leader who used to be called our President but at this point we do not have one, imo.  These are desperate times and will only get worse when the dollars we spent our lives saving become basically worthless.  We send billions to countries who hate us and do nothing to protect our own country and it's numerous problems. 

The "anger" is just beginning to swell from people like yourself.  Washington won't take us seriously until we bring that anger to the door of the White House and insist on politicians doing the job they get paid to do!
Anonymous   |     |   Comment #30
BOZO ...could you go through the math for me to get the 3.5% effective yield ...i see EE bonds currently pay only .20%...and you can only buy 10k of them per year .
Bozo   |     |   Comment #32
Anon #30. EE Bonds are zeros. They double in value at 20.
ytyt   |     |   Comment #33


Dear Congressman,

I am not your constituent, therefore you are not answerable to me.  Nontheless I have specific questions about Risk# 5 you cited.  I'll like to know answers if you'd be so kind to answer. Part of your job is to question others who appear in front of you, so I'm assuming that your questions are crystal clear and firmly based in reality.

>> Number five is that savers and retirees are being forced into riskier assets

Please let us know who this "saver" is?

You see, I checked "investopedia.com", "dictionary.com" and "merriam-webster.com", but could not locate any suitable explanation for who this "saver" is.  Should I assume that "saver" is a "made-up" term?  If it is a made-up term, then don't you think it is kind of hard for anyone (including the Chairman) to determine what it is that you are asking?

>> Number five is that savers and retirees are being forced into riskier assets

Since you are using the word "riskier", does it imply that the (so called) savers and retirees you are alluding to already possess "risky" assets?  To lay-down the basis what are some of the type of risky assets the (so called) savers and retirees already have?  Would that be stocks/bonds/mutual-funds and the likes?  Or do you mean the risky asset like a "CD" that is at risk of losing value due to inflation?

>> Number five is that savers and retirees are being forced into riskier assets

Who/what is forcing this?  Would you share with us some evidence of such a force getting employed agaist your constituents? Maybe a list that reads something like:

(1) Mr John Doe was forced from risky asset X into riskier asset Y on MM/DD/YYYY. He cited the force to be "ABC"

(2) Ms Jane Doe was forced from risky asset A into riskier asset B on MM/DD/YYYY. She cited the force to be "XYZ"


By no means I am trying to belittle you or anyone.  Merely finding out details of risk#5.

Yours Truly,
- Anonymous
ytyt   |     |   Comment #34


Dear Bozo - #28,

Have you considered the TIPs?

Yours Truly,
- Anonymous
Bozo   |     |   Comment #35
To: ytyt

Consigned my TIPS holdings to the discard pile some time ago, with a nice gain. Twice, actually.
ytyt   |     |   Comment #36


Dear Bozo,

These days doing even the international TIPs is getting easy by doing some of the ETFs.

I agree ... Series EE are great, especially beacuse "In Treasury I Trust" !! ... Have not done those lately.

Yours Truly,
- Anonymous

Anonymous   |     |   Comment #37

Only a fool would even consider buying TIPS. The interest rate paid on them is not based upon true inflation. Instead, it is based upon the faked-up CPI that was intentionally lowered so that folks like social security recipients' COLAs, TIPS and IBond owners could be paid much lower interest rates than the real inflation rates require. The US government is, unfortunately, bankrupt, and a plot appears to have been hatched, with the cooperation of the primary dealers of the Fed, to avoid overt default and to, instead, default by the stealth method of monetary inflation. Forget about COLAs, TIPS or I-Bonds ever being allowed to keep up with the true rate of inflation. They are just paper instruments designed to satisfy people who would otherwise turn to precious metals.
ytyt   |     |   Comment #38


Dear Anonymous - #37,

They are just paper instruments designed to satisfy
people who would otherwise turn to precious metals.

I am unsure about that.  ... So far as PMs/Miners are concerned ... I have no issue there. Check URL:


Yours Truly,
- Anonymous
ytyt   |     |   Comment #39


Dear Wanderer #37,

The attitude I have is quite like that of our President! :-)  Which is - "All of the above" ... EE, TIPs, PM, Miners, CDs, Structured CDs,  Structured Notes, Stocks, Bonds, Mutual Funds, ETFs, Currencies, Long, Short whatever ...

BTW, I do not subscribe to your conspiracy theory of the "hatched plot" , neither do I believe that the US Government is bankrupt. Sure we lost AAA rating, but we are pretty well off than (say) Greece.  :-)

Yours Truly,
- Anonymous
lou   |     |   Comment #40
Generally speaking, when the stock market is doing as well as it is, you would think deposit interest rates should be going up. A thriving stock market is usually synonymous with a growing economy and, therefore, steadily increasing interest rates, particularly on the long end of the curve. However, we are seeing the opposite of this typical cycle. Today, the stock market is surging, the economy is tepid and bank deposit rates are still falling. This huge deviation from past cycles can only be explained by the massive manipulation of markets by the Federal Reserve. This is unknown territory and I am afraid may have a very bad ending. Caveat Emptor!
Anonymous   |     |   Comment #42
#40 and #41, you are both right but too mild in you assesments.

Anonymous - #29 got it right and is closer to the truth.
Shorebreak   |     |   Comment #41
Re: lou - #40, Wednesday, March 6, 2013 - 4:49 PM

“This huge deviation from past cycles can only be explained by the massive manipulation of markets by the Federal Reserve.”

Yes Lou, in a sense the markets are being manipulated, through policy decisions.

“The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”

Bernanke and the Fed know that the unemployment rate will in all likelihood not drop below 6-1/2 percent any time in the next few years.  Therefore ZIRP is a long term fixture and the equity markets will  be in rally mode henceforth.
Anonymous   |     |   Comment #43
The trouble is that you have to hold EE bonds for 20 years for it to double in value.  During that time, you have no use of the money.   For a person 65 years or older, I am not seeing much interest here.  If interest rates rise in the future, the one invested in EE bonds may wish he had not done so. 
lou   |     |   Comment #45
#43, I wouldn't touch those EE bonds with a ten-foot pole. If you hold them for 19 years and 364 days, you get .2%. I would rather touch a scalding frying pan than own these bonds. This is a great deal for the govt, not so good for bondholders.
Shorebreak   |     |   Comment #44
Re: Anonymous - #42, Wednesday, March 6, 2013 - 9:46 PM

It's become fairly obvious what's going on here with all the personalities and policies involved. The greatest transfer of wealth in history going to ten percent, eventually to the top one percent, of the households in this country, and the world.

"In terms of types of financial wealth, the top one percent of households have 35% of all privately held stock, 64.4% of financial securities, and 62.4% of business equity. The top ten percent have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America."

paoli2   |     |   Comment #46
#44  If we are not in the top 10%, does that mean Obama will not redistribute our money?  Maybe he'll actually send us "more" money!  :)  Isn't that a Socialist article you shared?  Seems like our country is quickly heading that way unless they can find a way for Obama to retire early.  We can always hope!
Anonymous   |     |   Comment #47
Shorebreak   |     |   Comment #48
Re: paoli2 - #46, Thursday, March 7, 2013 - 9:15 AM

"Isn't that a Socialist article you shared?"

Since when is stating the obvious "Socialist"?

You really need to view the video that was posted by Anonymous - #47, Thursday, March 7, 2013 - 9:43 AM

Nancy   |     |   Comment #49
Ken, this was an interesting blog site before the yt takeover.  Just sayin'.

paoli2   |     |   Comment #50
Shorebreak:  I did watch the video, twice.  It's making the point about "wealth inequality" and unless I misunderstood it, I got the idea it wanted to show how different things were for the ones at the top than those at the bottom.  There are many ways to program people for wealth distribution without actually making it clear that is what is being done.  If you understood the video differently then that is your choice.  I was only posting about how I understood it.