Currently I am mad at the Federal Reserve aka “the fed” because they are costing me money, and I will tell you why.
The fed has two very important jobs: to keep the US economy growing, and to keep inflation low. The fed does this through two ways: open market operations, and controlling the federal funds rate. The fed controls the money supply and does that through raising and lowering of the federal funds rate. The fed has been lowering the rate in attempts to increase the money supply, stimulate the economy, and hold of that recession we have been hearing about. The fed rate currently stands at 3%. That means that banks can borrow money from the fed and only have to pay 3% interest.
This costs me money. The reason for this is that the banks can get “cheap money” from the fed. As a result they are not as reliant on the deposits of private citizens to conduct loans, pay its people etc. So my savings account (Emigrant Direct) has been cutting my interest rate to closely mirror the cuts by the fed.
When I opened the account at 4.97% it now stands at 3.5%. The problem is that I am too scared of the markets to put the money anywhere else and will just have to deal………..
