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How To Really Ruin Your Financial Life and Portfolio by Ben Stein

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Chapter 8

Cash Is Garbage—Except When It’s Not

Have you looked at your bank statements or money market account statements lately? It’s mighty discouraging. Basically, you get no interest at all. On some accounts at some banks, you get literally one hundredth of one percent per year to invest with them.

That’s cruel. I can recall back in the early 1980s when you could get 12, 13, 14 percent on fairly short-term CDs. It seems to me that there was a time when some CDs were approaching 15 percent interest. Of course that was when the economy was being choked into submission by Paul Volcker, chairman of the Fed, after a prolonged period of unacceptably high inflation. But never mind. There was a time when interest paid in the teens. It really happened.

So what’s this nonsense about basically no interest on your cash? Why bother to have it there at the bank or money market account at all? Your cash ain’t nothing but trash at these interest rates.

We all know that there are reasons why these current rates are so low. The Federal Reserve is committed to a Zero Interest Rate Policy to stimulate the economy. They buy Treasury bonds in immense quantities to keep the interest rates super low. You cannot fight the Fed and so you cannot search around and find higher interest rates hidden away in some small town where they haven’t heard of the Federal Reserve. These low rates on cash are universal. (Although, life is unpredictable. Even as I am writing this, there are rumblings that the economy ...

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