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U.S. interest rates have soared everywhere but savings accounts

bloomberg.com

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Re: U.S. interest rates have soared everywhere but savings accounts

#221

Post by loeg »

JumpCrisscross wrote: post #84
toomuchtodo wrote: post #58

Earlier quoted context omitted.

Would you say this speaks to the stickiness of savings accounts, in that there is no deposit account ACATS equivalent and folks won’t go through the effort of moving institutions to maximize savings returns?

> there is no deposit account ACATS equivalent There sort of is: wires and EFTs. The simple answer may be, for many savers, the spread is irrelevant. If you're saving for a home over a year [1], the difference between earning zero and 80 bps on e.g. $100,000 (quarter of the median home sales price [2]) is no more than $800. If these are your only savings, having them at an institution you know and trust may be worth…

Right now I-bonds are a pretty compelling down payment savings vehicle, at least for your first ~$15k/year, if your timeline is more than one year out.

Re: U.S. interest rates have soared everywhere but savings accounts

#222

Post by marcosdumay »

ericd wrote: post #179
mise_en_place wrote: post #166

Real interest rates are still negative, with inflation being at 9%. So even if the yield is 3%, on the 5 year treasury, the real yield is -6%. What fool would lend someone 100 dollars to get back 94 dollars in 5 years? The biggest sucker is the person who owns a 30 year treasury, and if the Fed starts selling its treasuries, good luck getting a reasonable price for it.

Someone betting that we'll hit a deflationary recession/crash where inflation will plummet along with interest rates, making their locked in interest rate advantageous?

Is the interest banks pay on deposit locked in any way (on the US)? I got the impression it changed month to month.

Re: U.S. interest rates have soared everywhere but savings accounts

#223

Post by spaetzleesser »

imtringued wrote: post #140
smm11 wrote: post #94

Trickle-down only works when it isn't for 'consumers.'

I think it is pretty common knowledge that money has diminishing returns. What I find absurd is that people actually bought the trickle-down nonsense. It's almost on the same level as flat earth. It's sooo obvious that this isn't how the economy works. If you want to give money away, give it to those who actually need it not those who need it least.

Trickle down worked extremely well for those who controlled the rate of trickle.

Re: U.S. interest rates have soared everywhere but savings accounts

#224

Post by marcosdumay »

Rastonbury wrote: post #10

Clickbait 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)

> hardly soaring

It's double the previous rate.

I don't understand why central banks always use fixed increment sizes.

Re: U.S. interest rates have soared everywhere but savings accounts

#225

Post by lsiq »

neilwilson wrote: post #163
gdurham wrote: post #77

The 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.

Banks don’t lend money out. Never have, never will. Banks are discount houses. They create their own money against financial assets they buy from you with that money. They are factories, not warehouses. Deposit interest rates aren’t going up because there’s nowhere else the money can go. Nobody wants be the retail to wholesale middleman at present.

Thank you, was hoping for someone to point this out.

Banks don't take deposits and they don't lend money. Banks create money.

When they "lend," what they are legally doing is purchasing a newly issued security for your home. And they are doing so with created money, that money is not transferred from some other account.

Similarly when you "deposit," the money is legally now the bank's. The bank now has a liability to you, but it is not a custodial intermediary "holding" your money for you.

It is poorly understood that banks are in fact creating credit. Most people believe in either the fractional reserve model of banking or in the financial intermediary model.

This is a real problem, because as they create credit to finance existing asset purchases (as opposed to financing new investment) they create asset price inflation & bubbles and foster inequality.

Read anything by the brilliant Richard Werner who writes about this extensively, this interview has a short summary of how banks actually work in law: https://youtu.be/EC0G7pY4wRE https://professorwerner.org/shifting-from-central-planning-t...

Re: U.S. interest rates have soared everywhere but savings accounts

#228

Post by marcosdumay »

joe_guy wrote: post #157
ChrisLomont wrote: post #133

Earlier quoted context omitted.

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 yea…

Looks like the US has a tank with the same "name" as the real-money supply. But here's a link:

https://tradingeconomics.com/united-states/money-supply-m1

Personally, I doubt anybody putting much relevance on M1 or M1'. But that's a 20% change in 1 year, what is quite large and probably has had some impact somewhere.

Re: U.S. interest rates have soared everywhere but savings accounts

#229

Post by FabHK »

wallacoloo wrote: post #219
JumpCrisscross wrote: post #74

Earlier quoted context omitted.

> TIPS don't seem to have a rate that would protect me from inflation The TIP yield is a real yield. It's indexed to CPI-U, same as Series I bonds. (TIPs adjust monthly; Series I bonds semiannually.) > would convert a some portion of my savings into stablecoins This is probably the worst choice one can make. It's accepting a 0% nominal yield against an unregulated counterparty. A Bank of America savings account is li…

> > would convert a some portion of my savings into stablecoins > This is probably the worst choice one can make. It's accepting a 0% nominal yield against an unregulated counterparty. A Bank of America savings account is literally a better choice. you clipped out half the sentence: > I would convert a some portion of my savings into stablecoins and spread them out into some interest accounts to try to minimize count…

And have credit risk against some untested crypto-startup without FDIC deposit insurance?

Re: U.S. interest rates have soared everywhere but savings accounts

#230

Post by ceejayoz »

throwthere wrote: post #200

Most people miss the fact that the fdic caps savings rates. Currently 0.81%.

That's not an obstacle; a lot of banks are getting around it by offering high-yield hybrid accounts that are checking behind the scenes, but have a savings-style interest rate.

For example, Sofi offers 1.25% right now; https://www.sofi.com/banking/

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