patrick.net

With the fractional reserve banking system set up by the Fed, the banksters are able to loan out 95%+ of your money at much higher rates, while they pay you a paltry 1% and charge you fees for the privilege of depositing your money with them. With creative accounting along with derivatives, the amount of digital money the banking system “loans” is multiplied even further. It's a pyramid - Ponzi scheme where the average American actually believes "their money" is available to them whenever they want it. It is, as long as no more than about 5% of the depositors show up to demand their money and cause a bank run.

It's been that way most of my life. I suppose it was considered desirable to convince people to put their money in CD, where banks would then use it for fairly conservative investments. Then Greenspan, Rubin, etc decided it was best for the world if all money was "liberated" from savings so it could be circulated through the hands of middlemen. You know central bankers speak with a scornful tone about "savings gluts". Fed decided to drop interest rates to encourage money flow into speculative bubble. So you had that era of ridiculously low returns, where you were considered a FOOL if you didn't pull close out your CD and invest in a condo somewhere. Now the Fed has decided to continue to drain that pool in order to pay prop up Bankster Balance Sheets (& bonuses).

Me I consider it sufficient to have some money in bonds, or something similarly low-interest but SAFE. In a deflationary environment staying even or getting a few nickels is still coming out ahead. I'll admit I have a chunk of money in AAPL and GLD right now, but I can quit gambling any time I want to....

It's pretty simple, if people actually do not open excess checking/savings account and settle for low interest rates on deposits, the banks will have to raise their rates to attract the needed working capital.

But that is easier said than done. We are so dependent on the banks settling our bills that most people need at least a 5K float on these accounts. The float to you is free working capital to the bank. Don't 99% of people deposit their check to the banks anyway instead of TD Ameritrade? That is why the rates are so much lower than the alternative, because they know people need a certain amount of checking/savings anyway. Why offer more unless you have to.

RayAmerica says

With the fractional reserve banking system set up by the Fed, the banksters are able to loan out 95%+ of your money at much higher rates, while they pay you a paltry 1% and charge you fees for the privilege of depositing your money with them. With creative accounting along with derivatives, the amount of digital money the banking system “loans” is multiplied even further. It’s a pyramid - Ponzi scheme where the average American actually believes “their money” is available to them whenever they want it. It is, as long as no more than about 5% of the depositors show up to demand their money and cause a bank run.

It's neither a pyramid or a ponzi scheme. You should really look up the actual definitions of those terms.

I don't mind savings accounts so much. The interest rates are garbage, but what else am I going to do with the money I need for an emergency fund?

With a savings account, my money is insured against theft, loss, or damage, so it's better than keeping it under my mattress.

Want a better return? Buy bonds and have your assets be tied up for fixed periods of time. Want even better? Try the stock market, though the short term risk can be enormous. Want even better? Try starting a business. The risk is even greater.

Because I want to retire early and live off of earned interest! It's harder to do that when savings account interest rates are below 2%. Seriously though, economics is an esoteric discipline that is highly unpredictable. I'll just take whatever interest they offer me while I grumble about some abstractions formulated by experts.