from Nick Giambruno, senior editor of Doug Casey’s International Man
One of the biggest robberies in the history of mankind is happening right now.
Strangely, few seem to notice.
Maybe that’s because the perpetrators are wearing suits and ties instead of ski masks. They use complex economic jargon instead of guns. And the media treat them with respect.
None of this changes the nature of their actions. They’re still taking without consent. The result is no different than if a thief picked your pocket.
Here, though, most victims don’t even realize they’re victims. The most prominent victims are retirees.
Retirees depend on the investment income earned from their life savings to pay the bills. The amount of income generated depends on interest rates.
You see, market forces don’t set interest rates. A politburo of central planners—who call themselves central bankers—set them. The Federal Reserve is the US’s central bank.
Central banks make the absurd claim that they operate independent of politics. In reality, they’ve always existed to please politicians. Their actions usually come at the expense of prudent savers.
For years the Fed has set interest rates lower than they would have been absent its intervention. It does this in the mistaken belief that it will benefit the economy by boosting spending. But encouraging spending just for the sake of spending isn’t sound economics.
Debtors also benefit because lower interest rates mean lower interest payments. And there is no bigger debtor on the planet than the US government.
Artificially low interest rates pump massive distortions into the economy. The results are disastrous for retirees.
Back in the year 2000, a five-year certificate of deposit would pay out about 6%. If you had $1 million, you could generate $60,000 per year with little risk.
Fast forward to today. The average CD now pays a meager 1.5%.
You now need $4,000,000 in retirement savings to generate that same $60,000 in annual interest income.
Saving money is four times harder than it was just 15 years ago, and the Fed is the culprit.
The Fed is siphoning money from savers by setting interest rates lower than what the free market would. It’s an enormous—but hidden—wealth transfer from savers to debtors. It amounts to one of the biggest swindles in world history.
But you don’t have to be a passive victim. If you take a global view, you can escape the Fed’s shakedown. Foreign investments can have higher yields and better risk/reward profiles.
Though chances are good that one of the big custodians—like Fidelity or Schwab—holds your retirement savings.
This is a problem because they put strict limits on what you can invest in. It’s like an investment straitjacket. Foreign investments likely aren’t on the menu.
There is no reason at all that it has to be this way, though……….
• more at: Doug Casey’s InternationalMan.com