Letter: Fed policy's a 'war on savings'

"With rates on savings stuck near zero, retirees

"With rates on savings stuck near zero, retirees rightfully complain of a war on savings," writes John Waldo Lombardi. (Credit: iStock)

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"Quantitative easing" seems to be accelerating once again, with no concern whatsoever about millions of senior citizens and their savings ["Fed to peg rates to unemployment," Business, Dec. 13]. Indeed, savers are hurt by this technique.

With rates on savings stuck near zero, retirees rightfully complain of a war on savings. The Federal Reserve cut rates to current levels at the end of 2008 and promised to keep them at or near zero. On Dec. 12, 2012, the Fed extended the program again -- until the unemployment rate falls to 6.5 percent or below -- which will probably not occur until late 2015, if ever.

As a result, since 2008, personal interest income has plunged 30 percent, or $432 billion. The accompanying reality is that households must slash spending to cope with lost interest income, which slows the economy.

John Waldo Lombardi, Woodbury

Editor's note: The writer is a professor emeritus of economics at Long Island University.

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