Pathetic rate of return

Ever since the advent of this recession, savers have been down on their luck. They have been getting the low end of the economic mess by getting extremely low to almost no rate of interest on their savings account. It is not only the retirees but also people who are try to be risk averse and putting money in savings account. The problem here is that the culture and laws favor spending over savings. We are asked to spend, spend, spend till we drop so that our factories (or rather the Chinese factories) keep on churning out stuff that we don’t want but are compelled, forced, enticed, asked, requested to buy so that our service workers (read Chinese Manufacturing workers) remain at work.

Then we get a huge trade deficit which we have to finance with selling government securities which we sell to international investors (read: Chinese/Japanese/Europeans and our own investors here) and we get more in debt. The Chinese (and other international and local investors) buy our securities and we just get more in debt. We get punished by getting abysmal or next to nothing rate of return. And then there is a lament among economists that we don’t save. There is actually no way to get higher return right now be it government securities, savings account or bonds. They are all long term and you know what is said about long term (we are all dead). Either the government should encourage more savings by giving incentives or stop making pleas about low savings return. Because unless there is a genuine cultural shift to savings (which it started during this recession) we will be continually in debt to foreign investors.