Victor Davis Hanson | The Revolutions We Missed

Take interest: not long ago most Americans assumed that when they retired, their 5-7% interest rate on passbook savings would provide some sort of income. Not now. There is scarcely a 1% return. In fact, most accounts lose money. The interest is not even matching the rate of inflation. Will we soon be charged by the banks for “protecting” our deposits?

At some unspoken moment, we shrugged and silently accepted Ben Bernanke’s world, along with the thousands of ways that his Federal Reserve Board has radically changed our lives. Those at retirement age are not stepping down, not when they have a bad/worse choice of receiving no interest income or putting their life savings in the stock or bond market. Our fathers may have retired at 58; we will be lucky to quit at 70. Is there even such a thing as retirement anymore?

No wonder that unemployed young people are endlessly circling the airport with nowhere to land, given all of us old planes perpetually taxing around on the crowded runways below. To understand the effect of no, or very low, interest, think of the billions of dollars in cash that are silently transferred from those who have saved to those who have no cash. The former receive little or no interest from the banks. The latter take out mortgages or car loans at historically low interest rates.

Did the president ever mention this revolution, among his boilerplate of “millionaires and billionaires,” “pay your fair share,” and “fat cats”?

Does it really make all that much difference whether you are a doctor at 70 who religiously put away $1,000 a month for thirty years, compounded at the old interest, and planned to retire on the interest income, or a cashless state employee with a defined benefit pension plan? The one might have over $1 million in his savings account, but the other a bigger and less risky monthly payout. Suddenly the old adult advice to our children — “Save and put your money in the bank to receive interest” —  is what? “Spend it now or borrow as much as you can at cheap interest”?


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