From Teeka Tiwari, editor, Palm Beach Letter: Since 2007, the U.S. government has been “stealing” $45.1 billion per year from American savers and retirees.
That’s $315 billion over the past decade that’s rightfully yours.
The perpetrator behind this grand theft: the Federal Reserve. It’s been confiscating your savings for years with its low-interest rate policies.
Let me show you how the theft is taking place…
For the past 35 years, U.S. interest rates (as measured by the 10-year Treasury bond) have been in free-fall. As of this writing, the benchmark rate is 1.46%. The historical average is 6%.
That dramatic decline is costing American taxpayers $45.1 billion per year in lost savings. This is a disaster for anyone trying to live off investment income.
[If you think my numbers are too aggressive… they’re not. They are very conservative. Former Atlanta Fed President William Ford estimates savers are losing $280 billion because of low interest rates… annually. That’s more than six times my estimate.]
Think about this…
In 2000, when rates were last at 6%, you would have earned $600 in interest on every $10,000 in Treasury bonds you owned.
Today, that same $10,000 in bonds will only earn you $146 in interest. That’s a 75% decline in interest payments in 16 years. Money that should be in your pocket.
And it’s all because of the Fed’s low-interest rate policy.
You see, Fed officials have a misguided belief that ultra-low interest rates will spark economic growth. They believe lower rates will induce people to borrow more because credit is cheaper… And that people will spend that borrowed money in the economy.
Guess what? It hasn’t worked.
We’ve had almost a decade of low interest rates with no results. U.S. economic growth is still running at a tepid 1-2% rate.
But those facts aren’t stopping the Fed from pursuing even lower rates. Let me explain why this “tax on savers” will get even worse…
The Fed Is Ramping Up Its Insane Policy
Undeterred by reality, the Fed is preparing to double down on its failed low-interest policy. And that’s the definition of insanity.
There are two signs showing this will likely happen…
- The Fed has backed off from the four rate hikes it promised at the February 2016 Federal Open Market Committee meeting. Retirees will be lucky to see one rate hike this year.
- The Fed funds futures market is predicting a 20% chance that rates may actually go negative by early 2017.
[Fed funds futures contracts can be used to estimate the market’s view of the probability of a rate change by the Federal Reserve.]
Make no mistake… The Fed is waging an all-out war against America’s savers.
And that means it will be more difficult for you to secure the type of safe income you need to see yourself through retirement.
To get by, you may be tempted to make riskier investments for a few more points of interest. Resist the urge!
[We’ve covered several ways to earn safe yields over 10% inside The Palm Beach Letter. Two of my favorites allow us to turn the tables on the Fed… and earn even higher income as it drags interest rates even lower. (Current PBL subscribers can click here to review them.)]
As the Fed prepares for negative rates, you must take action now
For years, American retires have relied on three sources of safe income: Pension plans, Social Security, and personal retirement accounts, such as a 401(k). But the Federal Reserve’s low-interest policies and money-printing are causing these three pillars to collapse.
Pension funds are battling insolvency… Social Security is facing more cuts… and personal retirement accounts are being siphoned off through hidden fees and new proposed taxes.
That’s why I’ve joined some of the leading retirement experts in the country for a historic Retirement Rescue Roundtable discussion… And on September 13, we’ll release our retirement “Plan B”… a revolutionary income plan that could help you fill your calendar with monthly, weekly, and daily checks… right now.
During this special 90-minute event, you’ll discover exactly how this unique plan works… why we’re unveiling it right now (the timing is critical)… and how you could use it to turn every $50,000 into $1 million or more during retirement. Register for your free spot today.