In recent years I have puzzled over why savers are putting up with confiscatory savings rates. Certificates of deposit and money market funds–the savings vehicles of ordinary people for college or a little extra income–pay annual rates returns of .1% (.001) and .2% (.002). These percentage figures are so small that they don’t translate into terms of everyday life. They are like measurements of subatomic participles. Who knows how much .002 is in real money and, more to the point, why bother to find out? The really vexing issue, though, is that these microscopic interest rates did not just happen on their own. Rather, they are the result of deliberate government policy that redirects interest income rightly due party A (small-time savers) and gives it to party B (banks). Quite apart from the constitutionality of such a transfer of wealth, it doesn’t seem fair, and people should be up in arms. Yet, strangely, they are remarkably docile. Some observers will object and say that government policymakers want to shore up banks, which will make the system stronger. But at the expense of impoverishing an entire class of its citizenry? I don’t think so.
Americans may not be so slow to anger over other government policy choices. I am thinking of the program to print money called Quantitative Easing or QE2. As long as the government prints money, however it is called, foreigners will sell dollars and buy materials, like oil and gas, driving their prices higher.
And so we are left with something of a puzzle. Americans don’t seem to mind having their pockets picked over savings, but gasoline is another matter.