Feature

Debunking the war on savers

Federal Reserve Chairman Ben Bernanke has taken a lot of heat for keeping interest rates near zero and pumping money into an anemic economy.

James SurowieckiThe New Yorker

The so-called “war on savers” is a myth, said James Surowiecki. Federal Reserve Chairman Ben Bernanke has taken a lot of heat for keeping interest rates near zero and pumping money into an anemic economy. The idea is to spur growth by “encouraging businesses to invest and hire and by making it easier for people to buy homes.” But it also means you get almost no interest on your savings. That’s inspired Bernanke’s critics to see him as “one of history’s great thieves,” responsible for “fleecing people, especially retirees, of hundreds of billions of dollars that they could have earned in interest.” I have nothing against saving, but I can’t muster too much sympathy for this particularly skewed vision of a saver. The fact is that few people live entirely off of interest income or savings; most savers “are also workers or homeowners or stock-market investors—groups that need a growing economy to prosper.” With the economy still weak, raising interest rates prematurely to beef up savings accounts could be a recipe for a double-dip recession. “It may be hard for people to live off their savings these days, but the far more urgent problem is that it’s even harder for people who don’t have jobs, or whose wages are stagnant, to save anything at all.”

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