“I’M A MAN OF MEANS BY NO MEANS…”

For all my complaining about the Wall Street Journal’s “banging on the war drums as a substitute for reportage” approach to journalism, I still consider it the nation’s greatest newspaper, and a page A1 article in today’s (i.e., Monday, 4/4’s) Journal fortifies that belief. The article “Fed’s Low Interest Rates Crack Retirees’ Nest Eggs” considers the human aspects of the Bush/Obama/Bernanke policy of keeping short term (and, if they could, long term, but that is grist for another mill) rates low in order to punish savers and reward spenders so that the economy will “return to health” in the wake of the number such enlightened thinking did on the nation’s finances a few years ago.

The problem faced by the elderly whom Messrs. Bush, Obama, and Bernanke have financially decimated is best summed up by Mrs. Eileen Keller, a retiree who, in her mid-60s, cannot be considered old, at least not by someone yours truly’s age. Mrs. Keller is quoted in the article as saying:

“It bothers me, because we did all the right things. We weren’t frivolous. We saved our money. And still we get hit by this.”

There are doubtless those who simply don’t care about the humanitarian aspects of the Bush/Obama/Bernanke approach to monetary policy. After all, these misanthropic types might argue, people in Mrs. Keller’s age group surely could have delayed retirement and those, like World War II vet Forrest Yeager, also featured in the article, have made the mistake of living too long. It is far more important, these wunderkinds might argue, to keep rates low so that the children of those trying to make it on a few hundred a month can continue to live several floors over their heads and Wall Street types won’t have to bear the ignominy of having to get by on low seven figure incomes. I, on the other hand, would argue that perhaps the only mistake Mr. Yeager’s generation made was to spend so much money on the educations of the generation which has now decided that screwing their parents is somehow enlightened economic policy, but I digress.

Other deep thinking types would urge the elderly to suck it up, take a little risk, and stop relying on such antiquated investments as CDs and money market funds. Why, these hair chests would argue, short term investments are a fool’s game; man up and put your money in the stock market and you can’t miss! 11% per year, (almost) guaranteed! Such financial estimables were doubtless dispensing such advice in 2007, which is a large part of the problem, but being a boomer or younger means never having to admit that you were wrong, but I digress again.

Even those who care little about the humanitarian plight of those who were foolish enough, in the misanthropes’ estimation, to save their whole lives rather than emulating the lifestyles of their children have to consider the economic ramifications of the Bush/Obama/Bernanke “damn the savers” policy. How can seniors spend money when they earn nothing on their savings? Since, according to the Bush/Obama/Bernanke approach, a healthy economy is characterized by raucous spending debauches (primarily on imported items, but I digress again), how can the economy get healthy when the seniors can’t spend? What does this do to the stocks of businesses that cater to the wants and needs of the elderly? Perhaps if we point out to the most destructive generation how their systematic screwing of their parents hurts them, maybe they will reexamine this policy.


One more thing that I found interesting about this article was included almost as an afterthought. The article states that

American’s net contributions to their financial assets, such as bank and 401k accounts, amounted to 4% of disposable income in 2010, according to the Fed. That’s the lowest level since it began maintaining records in 1946—except for 2009, when people actually pulled money out.

Hmm…, I thought. What about the return to saving, reflected in the increasing savings rate, that we keep hearing about? The answer was in the next paragraph. Reduction of debt is counted as saving. I knew that, but I didn’t know, as the paragraph goes on to say, that reduction of debts due to defaults count as savings when calculating the savings rate. O tempora, o mores!

So…

We are persecuting the elderly who had the good sense to save the old-fashioned way (i.e., by not feeling the need to purchase at this very moment everything they’ve ever wanted) while patting ourselves on the back for “saving money” by sticking it to our creditors.

We are, just in case I haven’t written this in awhile, doomed. Doomed, doomed, doomed.