The federal government has imposed a
virtual tax on savers, costing them $360 billion since 2007, according to a new
report by the research division of a major management consulting firm.
The Federal Reserve’s “Quantitative
Easing” policy has dropped interest rates to almost
zero, effectively taxing the flow of interest payments to older people who have
diligently saved cash for emergencies or retirements, according to the “discussion
paper,” which is titled “QE and ultra-low interest rates: Distributional
effects and risks.”
The virtual tax had the effect of quietly
transferring $900 billion to the federal government, and also boosting revenue
for cooperating big banks by $150 billion, says the report, which was produced
by the McKinsey Global Institute, which is run by one of the world’s major
management-consulting firms, McKinsey & Company
“Our headline finding is that ultra-low
interest rates have produced significant distributional effects,” said the
report, which estimated that lower interest rates have cost U.S. savers $360
billion since 2007.
The “QE” term is shorthand for “Quantitive
Easting,” which is a euphemism for the legal creation of new money by the U.S.
Federal Reserve. The money is used by the Fed to buy packages of shaky mortgage
securities on Wall Street, many of which were bought by regulated banks during
the housing bubble that eventually popped in 2007.
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Monday, December 2, 2013
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