Here in Canada at TD Bank their "High Interest Savings Account" for $0 to $4,999.99 the interest rate is 0.000%. Highly deceptive for them to call it that with literally 0% interest.
U.S. interest rates have soared everywhere but savings accounts
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Re: U.S. interest rates have soared everywhere but savings accounts
#152The issue is that there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash. Banks make money by lending money out, in times where banks are strapped for cash on hand, you will see interest rates increase. I don’t see this changing in the near future.
> "...there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash." and folks wonder why banks are so strictly regulated... no, banks are never sitting on too much cash unless they've made a marketing and/or an operational error. most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". q…
You’ve just described the Glass-Steagall act. It has a long and storied history.
It was created in response to the Great Depression, then repealed by the Gramm-Leach-Bliley act because money. Then the Dodd-Frank act tried to have it reinstated but failed, also because money.
You may already be familiar with all of this but mentioning in case you’re not.
(https://en.m.wikipedia.org/wiki/Glass–Steagall_legislation)
There’s a quite brilliant documentary that came out in 2010, Inside Job, that covers this, but which was completely overshadowed by the much less informative The Big Short which came out 5 years later.
Re: U.S. interest rates have soared everywhere but savings accounts
#153Clickbait title, the fed rate went from 0.25% to 0.5% hardly soaring. Savings accounts previously paid like 0.04% according to article, that's because they need margin and they can keep them low cuz people won't swap banks for half a percent (not that it'll get there anytime soon)
The yield on the 1 year t-bill has gone from 0% to 2%
That’s where I’ll be keeping cash I’d otherwise keep at the bank, for now.
Re: U.S. interest rates have soared everywhere but savings accounts
#154I always wondered why there was seemingly no (marketed) business in foreign savings accounts. If I'm willing to ride the exchange rate risks, surely there's some bank in Honduras paying a higher rate on Lempira-denominated accounts. Compared to half the derivative products on the market, it's a straightforward offering, and it also feels an ideal product for flim-flam direct-to-consumer marketing-- backed by "governm…
You don't think savings accounts yield interest out of charity, do you? In most cases they are a way to purchase bonds and alike for people who don't want (or don't know how) to deal with that, and the bank pocketing the difference for their services. If you're sophisticated enough to invest in a foreign country with a goal to actually get real returns and enough capital to make the hassle worthwhile, you'll find a w…
The best story of this kind is Sam Sloan (of Sloan vs SEC fame) having had this idea and trying to get his money out of an Afghan bank account right around the coup and Soviet invasion.
Re: U.S. interest rates have soared everywhere but savings accounts
#155Clickbait title, the fed rate went from 0.25% to 0.5% hardly soaring. Savings accounts previously paid like 0.04% according to article, that's because they need margin and they can keep them low cuz people won't swap banks for half a percent (not that it'll get there anytime soon)
> the fed rate went from 0.25% to 0.5% hardly soaring
That's a 100% rise in interest rates, which many people would call "soaring".
Re: U.S. interest rates have soared everywhere but savings accounts
#156Serious question: inflation seems to only be getting higher (is it 8%+ now?) the Fed's increasing of the interest rate is causing a stock market crash. So if one puts their money into assets, those are decreasing in price due to the fed, and if someone is holding cash that's also going down in value due to inflation. What's the solution?
> Fed's increasing of the interest rate is causing a stock market crash. Citation needed. Rate hikes were announced mid-march and I don't think you can even find that info on this chart https://finance.yahoo.com/quote/%5EDJI/ If we do see a crash soon I think it will likely be more related to major tech stocks failing to perform as expected. Of the original FAANG, F and N have both had days where there value dropped…
Just because the formal rate increase happened in March doesn't mean people didn't know about it already. Rate hikes are typically speculated on for several weeks (months?) before they actually happen. By the time it actually happens, the market has always priced it in.
The decrease in Jan/Feb was in anticipation of the March increase. And the current swings are in anticipation of the May/June increases.
Re: U.S. interest rates have soared everywhere but savings accounts
#157Earlier quoted context omitted.
Americas anual GDP was $21t in 2020. Federal COVID relief funds were 4.6t over the span of 2 years according to https://www.usaspending.gov/disaster/covid-19?publicLaw=all That's just over 10% of the GDP. Not a small amount by any measure but our numbers are rather different. What am I missing?
GDP and USD are not the same thing. GDP measures production over a year (a timespan which is simply an artifact of our planet) in US dollars. It's a rate. USD is the sum of US dollars in use. It's an amount. Comparing a rate (defined by an arbitrary local constant) to an amount doesn't make much sense.
My googling for the sum of USD hasn't been fruitful if you don't mind providing a link.
I do take issue calling an anual arbitrary. It's a very common denominator used in finances. ie, you pay taxes anually. Don't attempt to tell the government it's arbitrary. To be pedantic, everything is arbitrary, even the value, the amount of, etc of USD, invadating this entire discussion.
As a society we agree upon things. A year is not an arbitrary unit of time.
Re: U.S. interest rates have soared everywhere but savings accounts
#158Earlier quoted context omitted.
Have a diversified portfolio. Rational Reminder went over the data in "The Ultimate Inflation Hedge": > Is it possible to hedge your investments against different levels of inflation? This is the question we ask in today's episode, as we run through a variety of different investment approaches and commodities. While the answer may not come as a huge surprise, it is definitely worth the walk-through and getting to gri…
When everyone’s settled on maximizing the diversity of their investments, I wonder if the strategy loses viability as an effective hedge.
There will never be a point of time when "everyone" will do it, viz /r/wallstreetbets.
It's been known that trying to pick individual stocks is generally a sucker's bet since (at least) 1973, but people still try to do it:
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
Re: U.S. interest rates have soared everywhere but savings accounts
#159Real yields matter. It's an inflation tax. If inflation is high and the interest rates are low. This tax is on you for holding currency or currency likes. Bonds for example are literally dumb to buy. Why are people buying them? They are legally required to buy them in some cases. What happens is that those 'savings accounts' are paying the inflation tax. Whereas someone with a mortgage at say 2% and inflation is 8%.…
Re: bonds - it's not that crazy to think that high inflation may be behind us, and things settle down soon. 8% YoY is the trailing number, we have no idea what the leading number will be.
It's also not that crazy to think that rising rates causes a deflationary crash in the next year or two and causes the fed to drop interest rates back to zero (and thus, bond prices to go up). Honestly if the US 10yr treasury goes over 4% I would probably buy some, though it seems unlikely to happen.
Re: U.S. interest rates have soared everywhere but savings accounts
#160Earlier quoted context omitted.
One could argue that inflation increases the value of future income streams, which is not a bad thing if your goal is to maintain civilization. What irritates me is that a lot of people seem to treat this "humanity project" like a paper towel that is meant to be thrown away the moment they die. You can't just put labor in the fridge and then take it out when you are 70. Time doesn't stand still. So old people are rel…
> could argue that inflation increases the value of future income streams No?
They probably mean relatively, since there is no 'real' value for labor. we can only see a comparison between the price of labor today and the price of the same labor 20 years from now.
Due to inflation, today's labor would be far less valuable in $ terms.