i was just listening to a podcast on american public media’s marketplace, and there was a really interesting segment on there. the argument was basically that those who saved are now suffering. and this makes a lot of sense, because people who had money in variable-rate savings accounts (normal savings accounts, not time-locked, fixed-rate things like certificates of deposit) are seeing their interest rates drop steadily.

now let’s watch the logic circle here.

• these interest rates are dropping because central banks needed to increase lending and credit.
• so lowering the rates makes payouts on deposits lower, and makes it cheaper for banks to borrow money from central banks.
• banks need to borrow because their consumers overspent and are now defaulting.
• those people overspent because they borrowed too much and didn’t save enough.
• so the savers are the ones who, in a way, did the right thing.

i think it really shows, in the end, that the way things were running before was a house of cards. i don’t think that these measures are really going to solve the problem. the biggest fix needed is on the consumer side. we cannot continue to live paycheck to paycheck, constantly taking theoretical money out of our home mortgages via refinancing. we have to live within our means.