18 November 2010

Interest Rate Policy Punishes Most Vulnerable

The Bank of Canada's interest rate policy punishes saving and rewards debt. As does the federal government when it bails out "too big to fail" corporations and industries and rescues banks from the results of their rash decisions.

Such policies punish those people who scrimp and save, who put off buying today so they'll be able to live tomorrow. Many of these people are now in, or about to enter retirement; only to find their savings earning one or two percent or, if they're particularly fortunate, 2.5 percent.

Such people dare not put their savings into the markets, not when their lives are reliant on those savings. We have all seen what happens to the markets.

How did Canada get things so ass backwards?

How did Canada get to rewarding people who buy like there is no tomorrow? Who get mortgages they can't afford? Who purchase more automotive and recreational vehicles, gadgets and gewgaws, vacations and cruises than they could ever use?

Too many seniors today are struggling to make ends meet because their hard-earned savings are earning less than the increases to their living expenses, such increases exceeding the cost of living. (For most seniors, some form of disability is present.)

This situation, the erosion of seniors' and others' savings, is thanks to the interest rate policy of the Bank of Canada.

It's downright criminal. It also costs governments.

For anyone on some form of financial assistance - for example, disability benefits, seniors' Guaranteed Income Supplement - any personal income, including that of interest from savings, must first be taken into account. The lower those earnings or income, the more government pays.

[Cross-posted at economicus ridiculous]

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