Charles Schwab, the investment guru, speaking out in The Wall Street Journal, bemoans the low interest rates on saved money that has affected so many retirees. Schwab is calling for the nation's central bank (The Federal Reserve) to raise interest rates.
While Schwab estimates that the loss of interest income is $58 billion in annual income since 2008 ($348 billion total), that figure is much higher when the real inflation rate is factored.
Schwab says there is $11 trillion in short-term accounts bearing very low interest. Schwab doesn't reveal all of the numbers used in his calculations, but let's say he was factoring the difference between 5% interest versus the less-than-1% now offered, for a difference of ~4%. On a compounded basis, that would amount to a loss of ~$2.915 trillion of interest income (mercy!) over the past 6 years.
The erosion of wealth due to inflation adds to the problem. It is economist John Williams of ShadowStats.com who shows the real rise in inflation (cost of living) is closer to 10% rather than the central bank's target inflation rate of ~2.2% which matches the Bureau Of Labor Standards questionable inflation numbers. (ShadowStats.com)
While Federal Reserve chairman Ben Bernanke said the economy was recovering, his bank was masterminding the robbery of trillions of dollars from American savers while bragging the Fed was keeping interest rates low that (a) created a false bubble in the real estate market; but (b) managed to keep interest on the national debt low ($400 billion on $17 trillion).