No, Ben Bernanke Doesn’t Hate Savers

thenews 2013.04.06 04:15

Fed critics say the central bank's loose monetary policies are bad for savers. It’s a criticism the public has heard over and over again. For the past four years the Federal Reserve has kept interest rates near zero and has bought trillions of dollars in mortgage-backed securities and treasuries to give the economy a needed boost. Still, Senator Bob Corker of Tennessee has accused Fed Chief Ben Bernanke of “throwing seniors under the bus.”

In his latest article, James Surowiecki of The New Yorker, argues that this criticism is wrong, or at least misguided. First off, Surowiecki argues, most Americans aren’t living off the interest from their savings. In fact only 7% of all financial assets in the U.S. are held in interest-bearing assets. Even senior citizens, the group of Americans that Bernanke is purportedly hurting, only receive 10% of their income from interest. The truth is, says Surowiecki, people who are living mostly from savings and interest from savings tend to be a small and elite group. More Americans are in debt than are savers, and low interest rates help those in debt.

“The needs of the many outweigh the few,” says Suroweicki. "These are very difficult times for the long-term unemployed of whom we have 4.6 million who have found it impossible to get jobs.”