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The Fed is Sacrificing Retirees to Save the Banks

By

FOMC Chairman Powell answers a reporter’s question at the press conference.

You may have heard three cheers from Wall St. recently when JPMorgan Chase & Co. announced its “highest-ever quarterly profit.” The bank, America’s largest at the moment, got an extra boost by recognizing that some loans it had previously written off were actually going to pay. Good for the bank, right? Sure, but to make it happen the Fed is holding interest rates at nearly zero and sacrificing savers and retirees to save big banks.

There are no plans to change course or to have banks share in the pain being suffered by America’s savers and retirees. The NY Times reported this morning that Fed Chairman Jerome Powell plans on holding interest rates low for a long time. Jeanna Smialek reports:

With the incoming Biden administration pushing for more economic stimulus and with multiple coronavirus vaccines already approved, some investors have been wondering whether the Federal Reserve might soon start to ease off its support for the economy.

Jerome H. Powell, the central bank’s chair, made it clear on Thursday that the central bank would be cautious in doing so — and that action was anything but imminent. During a webcast question-and-answer session, Mr. Powell said it would take time for the economy to recover from the pain of the pandemic era.

“When the time comes to raise interest rates, we will certainly do that,” he said. “And that time, by the way, is no time soon.”

Action Line: In times like these, you need to pay attention to what the Fed is doing to your potential for investment income. If you don’t have good advice about bonds and equities, you’ll invest, but they’ll win.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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