Federal Reserve Chairman Ben Bernanke has a message for savers who are unhappy about the prolonged period of near-zero interest rates: tough luck.
Of course, the Fed chairman didn't use those two little words exactly. Instead, he explained at greater length why the Fed intends to stay the course of near-zero rates despite the significant hardship suffered by people who expected to earn a reasonable, safe return on their hard-earned nest eggs during their retirement years.
In an Oct. 1 speech at the Economic Club of Indiana in Indianapolis, Bernanke acknowledging the pain for savers and investors, saying he and his colleagues were aware of this situation.
Rather than offer any real hope of relief, he went on to say that the current low rates are "in a larger sense the result of the recent financial crisis." That seems to suggest the Fed is not responsible.
He then noted that savers "often wear many economic hats" since they also might own a home, run a small business, have a job or invest in stocks or other asset classes.
"The crisis and recession have led to very low interest rates, it is true, but these events have also destroyed jobs, hamstrung economic growth and led to sharp declines in the values of many homes and businesses. What can be done to address all of these concerns simultaneously?" Bernanke said.
The chairman's answer: Keep interest rates super-low "for a time" to strengthen the economy.
"Only a strong economy can create higher asset values and sustainably good returns for savers. And only a strong economy will allow people who need jobs to find them. Without a job, it is difficult to save for retirement or to buy a home or to pay for an education, irrespective of the current level of interest rates," Bernanke said.
Savers, hold on to your hats. Is there anything else that the Fed can do? What do you think?
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