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Message: Why does Pres. Obama hate savers?
Kevin McElroy | Resource Prospector | July 27, 2011 9:19am EDT
I know I've spent the last two days resisting the temptation to discuss the debt ceiling.
But I can resist no longer.
Monday night, President Obama went on TV and said something that made me very angry.
He said that a default on our Treasury debts would cause interest rates to rise, which would be a "tax" on people who needed to borrow money, on credit card users and on people with mortgages.
What he didn't mention is that a rise in interest rates would help people like me: the savers.
You know, those people who don't live beyond their means, the people who don't take on huge amounts of debt, the people who simply want to make a decent return on their savings.
Remember the days, not so long ago, when you could get a 6% certificate of deposit or a 5% savings account?
The days when a 3 month Treasury note would pay you over 6% APY - if you can remember back to 1991.
Those were good days for savers. They were bad days for profligate spenders. You know those folks: they're the people who take on more debt than they can possibly pay back, knowing that they're likely to default on it or get bailed out by the government.
When interest rates are high, they go broke - their reckless spending habits get them in trouble quickly. They get eaten alive by interest, and are completely sidelined when rates go even just a little bit higher.
But what President Obama doesn't understand is that there's an entire class of people who love higher rates - the middle class savers who built this country, and who are getting killed right now by artificially low rates that he and Ben Bernanke have orchestrated.
President Obama has to realize that artificially low rates are inherently inflationary - and inflationary policy is notoriously disastrous for the most important sector of any country's economy: the middle class workforce.
And these low rates are also the primary reason why so many people are fleeing the dollar, and running to commodities.
If I could get a decent rate of return on my cash savings, I would hold a lot less gold and silver than I do now. I also probably wouldn't have opened up bank accounts in foreign countries.
Instead of using excess cash to buy precious metals, I'd keep it in a savings account - or maybe I'd even spend some portion of it - because I'd know I could earn more interest on the remainder.
The other thing about Obama's rhetoric is his notion that a default would be utterly disastrous for our democracy or for the American way of life.
If we were having a rational discussion about, say, GM's unsustainable debts, no one would bat an eye if the idea of a default was on the table.
If you can't realistically pay your debts, default is the only option left. I'm of the camp of people who think we should default as soon as possible. President Obama isn't going to pay down our debts. Nor will John Boehner, Harry Reid, Mitch McConnell or Nancy Pelosi.
Those folks will be out of office or dead by the time most of the unfunded liabilities come due.
So I realize it's a viewpoint you're not hearing in the mainstream media - but I believe we should immediately cancel all Foreign held Treasury debt, and move on from there.
China and other foreign creditors should take it in the shorts for being so stupid as to loan billions of dollars to an entity that is COMPLETELY broke by any metric.
We should stop issuing new debt until we have some rational plan to pay for it when it comes due. Kicking the can down the road is a slap in the face of future generations of Americans - people who haven't voted for any spending programs, entitlements, wars, or kickbacks.
You'll hear from politicians and pundits that we need to kick the can down the road - but that's only because they're afraid to face the consequences of their actions.
Kicking the can NEVER makes the problem better - facing the consequences will make things better.
At the very least, you and I will get a decent yield on our cash savings.
And at the most, maybe this Federal Government will stop raiding the currency to fund a variety of disastrous spending programs that only serve the folks in DC to the detriment of regular Americans.
But in the mean time while we wait for pigs to fly, I'll be buying gold - and I hope you do the same.
But I can resist no longer.
Monday night, President Obama went on TV and said something that made me very angry.
He said that a default on our Treasury debts would cause interest rates to rise, which would be a "tax" on people who needed to borrow money, on credit card users and on people with mortgages.
What he didn't mention is that a rise in interest rates would help people like me: the savers.
You know, those people who don't live beyond their means, the people who don't take on huge amounts of debt, the people who simply want to make a decent return on their savings.
Remember the days, not so long ago, when you could get a 6% certificate of deposit or a 5% savings account?
The days when a 3 month Treasury note would pay you over 6% APY - if you can remember back to 1991.
Those were good days for savers. They were bad days for profligate spenders. You know those folks: they're the people who take on more debt than they can possibly pay back, knowing that they're likely to default on it or get bailed out by the government.
When interest rates are high, they go broke - their reckless spending habits get them in trouble quickly. They get eaten alive by interest, and are completely sidelined when rates go even just a little bit higher.
But what President Obama doesn't understand is that there's an entire class of people who love higher rates - the middle class savers who built this country, and who are getting killed right now by artificially low rates that he and Ben Bernanke have orchestrated.
President Obama has to realize that artificially low rates are inherently inflationary - and inflationary policy is notoriously disastrous for the most important sector of any country's economy: the middle class workforce.
And these low rates are also the primary reason why so many people are fleeing the dollar, and running to commodities.
If I could get a decent rate of return on my cash savings, I would hold a lot less gold and silver than I do now. I also probably wouldn't have opened up bank accounts in foreign countries.
Instead of using excess cash to buy precious metals, I'd keep it in a savings account - or maybe I'd even spend some portion of it - because I'd know I could earn more interest on the remainder.
The other thing about Obama's rhetoric is his notion that a default would be utterly disastrous for our democracy or for the American way of life.
If we were having a rational discussion about, say, GM's unsustainable debts, no one would bat an eye if the idea of a default was on the table.
If you can't realistically pay your debts, default is the only option left. I'm of the camp of people who think we should default as soon as possible. President Obama isn't going to pay down our debts. Nor will John Boehner, Harry Reid, Mitch McConnell or Nancy Pelosi.
Those folks will be out of office or dead by the time most of the unfunded liabilities come due.
So I realize it's a viewpoint you're not hearing in the mainstream media - but I believe we should immediately cancel all Foreign held Treasury debt, and move on from there.
China and other foreign creditors should take it in the shorts for being so stupid as to loan billions of dollars to an entity that is COMPLETELY broke by any metric.
We should stop issuing new debt until we have some rational plan to pay for it when it comes due. Kicking the can down the road is a slap in the face of future generations of Americans - people who haven't voted for any spending programs, entitlements, wars, or kickbacks.
You'll hear from politicians and pundits that we need to kick the can down the road - but that's only because they're afraid to face the consequences of their actions.
Kicking the can NEVER makes the problem better - facing the consequences will make things better.
At the very least, you and I will get a decent yield on our cash savings.
And at the most, maybe this Federal Government will stop raiding the currency to fund a variety of disastrous spending programs that only serve the folks in DC to the detriment of regular Americans.
But in the mean time while we wait for pigs to fly, I'll be buying gold - and I hope you do the same.
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