Yesterday’s post on inflation received this comment from a reader in Germany:
There is no inflation!!! It is easy to prove. How? Do not count the cost of lliving raises? Aboding here in Germany, my entire life’s saving earned last year a, yes, fantastic REAL minus interest of ca. 1%. Oh, there was only a gov. ascertained inflation rate of 1.8% for 2012 (hell, a new top line Mercedes is not more expensive or a trip around the world for two cosst the same) with a nominally earned interest rate for savings at 0.5%, yes 1/2 of a percent gain (vs 1.8% inflation, not to mention US-comparable augments here in food, clothing, etc. costs) I have entered the path of decline. Let me repeat, I received 1/2 of 1% cent nominally and lost ca. 1% power of real purchasing power. In 2007 I would have received 4.25% nominal interest with low inflation and that might return except that the gov. holds the interest down. The ECB has explicitly announced that there is no limit, none whatsoever, of the “funny money” (as Buckley used to call it) that will be used to bail out Greece and any other wayward land of the south. That means my non-earning savings will continue on financing the ECB’s give away. As a saver I can no longer effectively participate in the market through my bank’s savings. (The bank earns a healthy percentage with my money and not I.) No relief is in site. [Emphasis added]
I emphasized that one line because it’s true here, too: banks earn plenty on our deposits, while we earn a negative rate of real return. That’s a huge transfer of wealth — legalized theft — from middle-class savers to rich banks.
We’re still bailing out these bastards. Still.