Winners and Losers
BY KEITH TUCKER
Special to The Enterprise
Most every set of circumstances results in benefits for some and disadvantages for others. A case in point is the interest rate that has been charged and paid by lending institutions for several years. It is a fact that borrowers have benefited while people with savings accounts have suffered. Generally speaking, older people who have worked and saved have subsidized younger people buying on credit. What the people setting the fed fund rate this low has said is the economy needed this low rate. I disagree.
The analysis did not take into account that the money from the interest on savings would have been reintroduced into the economy and worked as a stimulus. This would have been a much healthier way than loaning cheap money. What was done created a much higher debt load in total for the country because people could borrow more with the same payment. Now for those with adjustable-rate mortgages, it’s time to pay the piper. What I can’t for the life of me understand is why with the resources available to crunch all this data and make good decisions it is beyond our grasp.
The following is just my opinion. Home loans at 6 percent are fair to both sides. Three dollar a gallon gas is fair to the producer and the consumer. That equates to about $60 a barrel of oil, which is what it takes to keep producing it domestically. The thing is no one is going to turn down 3 percent mortgages or $2 gas. But neither is in the best interest of the country. How you feel about this article is probably going to depend on whether you’re a lender or a borrower.
Editor’s note: Keith Tucker is a Greenfield resident and owner of The Marble Shop. He may be contacted by email at email@example.com.