I Won't Be Returning To Restaurants And I'll Be More Careful About Where I Spend My Money.

keithsanfran | May 15, 2020 | 15 posts since 2014

The govt. wants to get people spending; well, count me out. With the arrival of zero-interest for the foreseeable future, my discretionary income has also been reduced to zero Going to restaurants, going on vacation trips, buying gifts, fixing up the house, buying a new car will all have to come out of my principle - savings. Spending income is a lot different than spending away principle. So , count me out on helping to stimulate the economy.

Soon, we'll be hearing the stock crooks tell us how to generate income in this environment. Well, I don't think I will be turning my principle over to an investment advisor. When have they ever seen a financial environment like this one? And I won't be running out and buying dividend stocks or REITS like GE - high about 60, recent low in the 5's. I am in my 70's, I do have money in stocks and bonds, but I won't be putting in anymore. So, the best I can do is tighten my belt and keep up on this Deposit Accounts site and bump into some good CD deals Simple as this.. Just wanted to share.. Wonder who else feels this way?.

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tj_lee | May 15, 2020 | 1 posts since 2019

I absolutely AGREE!

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GH1 | May 16, 2020 | 1,058 posts since 2017

I am with you

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Choice | May 16, 2020 | 937 posts since 2020

I posted a Q earlier on ...what interest rate does one need on CDs for retirement?...the responses were underwhelming. My thought was the rate is relatively unimportant if one retired with sufficient funds to weather a storm...one generally can’t go back to work and doesn’t want to raise the risk element. It’s all gravy when the rates rise and thus discretionary funds are spent then. Proper Prior Planning Pervents ...Poor Performance

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Bozo | May 17, 2020 | 1,375 posts since 2011

Choice, with lower rates on CDs and savings, those of us in retirement who rely on interest income from same must plan to harvest more prudently. Thankfully, our prior planning included ZIRP as a scenario, so we'll be OK and won't have to trim our budget. It doesn't hurt that we have 4 1/2 years left to go on our 3% NavyFederal CD, which spits out a tidy sum each month to our checking account.

Ironically enough, we've been using Amazon/Whole Foods for our grocery shopping for the past two months, and have been pleasantly surprised. The service is prompt, the selections more than adequate, and the prices competitive. For those in a service area covered by Amazon/Whole Foods, I'd suggest you give it a try.

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Choice | May 17, 2020 | 937 posts since 2020

Bozo... Good update...Great R convinced me of plan of action! I have several NFCU (and other CUs) CDs but, as alluded to, not needed for day to day...go out very early in morning for seniors at markets twice a week (hardly anyone there) and to P.O...get all important stuff at PO...with preplanned purchases...daughter suggested food delivery service but I decided to wait until needed or the shake out of the survivors/delivery firms comes to top! Price at stores not the issue but availability. Stay safe! Watch USBanc!

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me1004 | May 17, 2020 | 1,381 posts since 2010

This has been my point since the 2008 crash. When they want more spending, they can't slash the income of the only ones who might actually be in a position to spend -- if you didn't take their income away: the responsible people, savers.

If people are not taking out loans when the fed rate is at, say, 2%, it is not because the lending rate is too high, it is other reasons. When you respond to a crashed economy by slashing the Fed rate, all you accomplish is to pull the rug out from the people who might spend by taking away their income -- you have accomplished is to make the last ones otherwise able to spend no longer able to spend. You have not helped the economy, you have made matters worse. And so the 2008 crash took a decade to recover, and not because of low Fed rate, despite the low Fed rate. Just the decade it took shows the low Fed rate did not help.

But worse, people can't spend when all the businesses are closed, as is the case now! Slashing rates in the face of businesses ordered to close does not open those businesss.

All they are doing is commandeering the income of responsible savers, leaving them unable to spend. It is just a transfer of money -- not the government's money, it is commandeeering individual savers money to fund government programs for others.

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Choice | May 17, 2020 | 937 posts since 2020

And, everyone should (have) planned on the government’s action when a crisis comes forth (as it will) ..it actually started when Hoover would NOT move as the fed is doing...primarily b/c his party was in control and did not believe in helping anyone..then the 1932 election resulted in the tools of today being implemented. The FICA is what’s next on the list...a certain party wants it to be repealed in the guise of increasing paychecks...but that would defund Soc Sec...so that is the rub...dump Soc Sec by lapse of funding. Message is...those counting on Sec Sec in the future better not!

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me1004 | May 18, 2020 | 1,381 posts since 2010

Choice, FDR did not implement "the tools of today," as in the fluctuating Fed rate. In fact, it is Nixon who took us off the gold standard, and the fluctuating Fed rates got started when Jimmy Carter was president, and he named Paul Volker to the Fed because Volker was a major advocate of using the Fed rate to guide the economy and tame inflation.

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Choice | May 18, 2020 | 937 posts since 2020

“ On several occasions, the Federal Reserve did implement policies that modern monetary scholars believe could have stemmed the contraction. In the spring of 1931, the Federal Reserve began to expand the monetary base, but the expansion was insufficient to offset the deflationary effects of the banking crises. In the spring of 1932, after Congress provided the Federal Reserve with the necessary authority, the Federal Reserve expanded the monetary base aggressively. The policy appeared effective initially, but after a few months the Federal Reserve changed course. A series of political and international shocks hit the economy, and the contraction resumed. Overall, the Fed’s efforts to end the deflation and resuscitate the financial system, while well intentioned and based on the best available information, appear to have been too little and too late.

“The flaws in the Federal Reserve’s structure became apparent during the initial years of the Great Depression. Congress responded by reforming the Federal Reserve and the entire financial system. Under the Hoover administration, congressional reforms culminated in the Reconstruction Finance Corporation Act and the Banking Act of 1932. Under the Roosevelt administration, reforms culminated in the Emergency Banking Act of 1933, the Banking Act of 1933 (commonly called Glass-Steagall), the Gold Reserve Act of 1934, and the Banking Act of 1935. This legislation shifted some of the Federal Reserve’s responsibilities to the Treasury Department and to new federal agencies such as the Reconstruction Finance Corporation and Federal Deposit Insurance Corporation. These agencies dominated monetary and banking policy until the 1950s.

“The reforms of the 1930s, ’40s, and ’50s turned the Federal Reserve into a modern central bank. The creation of the modern intellectual framework underlying economic policy took longer and continues today. The Fed’s combination of a well-designed central bank and an effective conceptual framework enabled Bernanke to state confidently that “we won’t do it again.”

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