Liz Warren’s Disappearing Act

Despite the Biden administration’s intentionally misleading, disingenuous blathering about this 50-year-high inflation being transitory, any 19-year-old freshman Econ 101 student could see that it wasn’t. Janet Yellin knew she was lying when she said it. “President” Biden read what his handlers wrote and said that this awful inflation would abate.

It’s been one lie after another from the Democrats in D.C., compounded with economic policies that could only make matters as bad as possible. When President Trump left office in January 2021, the national average for gasoline was around $2.30/gallon. Biden immediately signed a series of anti-energy executive orders restricting fracking, oil exploration, and fossil-fuel production. He did this for two reasons: 1) To counter and negate anything that President Trump had done, simply out of infantile spite; 2) To curry approval and favorable publicity with the Green New Deal faction and their supporters.

Predictably, retail gasoline pricing spiked. It was soon in the mid-$3.00 range, more than a dollar over where it was under President Trump. This was well before Russia invaded Ukraine. This was not “Putin’s price increase.” This was all Biden. As fuel went up, transportation/delivery costs increased and pricing for all goods started to go up. This was an absolutely unnecessary tax on the American public, diluting consumer’s buying power and sapping their confidence.

The Biden energy policy’s effect on overall consumer pricing would have been bad enough if that’s all that there was. But it wasn’t, not by a long shot.  Biden instituted a series of government spending programs ostensibly to help American households cope with the economic hardships (layoffs, business closings, etc.) brought about by the COVID-19 crisis. However, the government’s spending was so excessive that a classic inflationary spiral resulted, as the textbook reality of “too much money chasing too few goods” manifested itself once again. Now we have 7, 8, 9% inflation, following years of 1-2% Trump-era inflation. But excessive government spending hasn’t slowed, so it’s unlikely that inflation will lessen.

The standard governmental response to high inflation is for the Fed to raise interest rates. In essence, the higher interest rates tamp down consumer and business activity by making borrowing more expensive. Businesses then get nervous that they’re losing customers when people can’t afford the higher-interest loans, so they react by lowering their prices in an effort to entice people to buy. Lower prices = an end to inflation. That’s the theory in a nutshell.

A direct effect of the Fed raising interest rates is that commercial banks also raise theirs, for both loans and interest-bearing savings accounts. Here’s where it gets interesting for those paying close attention. Banks don’t waste a nanosecond when it comes to raising their loan interest rates. When the Fed raises their rates, the commercial banks follow suit immediately. Mortgages, home equity credit lines, credit-card balances, they all go up right away. Anyone with a variable-rate mortgage or home equity loan has seen a pretty hefty increase in their monthly bill.

However, banks aren’t so quick to raise the interest they pay out on savings accounts and CDs. The best CD rates were around 4-4.25% before the last two Fed rate increases. The Fed went up .75% and then followed that with a .5% rise. You might think that of that 1.25% increase, banks might pass along, say, 1% of it to their depositors. Not so. CD rates are inching up ever so slowly, if at all. The very best CD rates in the country are barely over 4.5% and those are only for on-line accounts. The banks are keeping the higher interest mostly for themselves.

Which brings us to the nowhere-to-be-found likes of Elizabeth Warren, the so-called consumer financial advocate senator from Massachusetts. Warren has made herself famous over the years decrying the supposedly malicious behavior of large financial institutions and creating all manner of investigatory boards to search for wrongdoing. Her efforts have never actually accomplished anything productive for the average person. She just gloms a lot of favorable coverage from the liberal media and draws a lot of underserved attention to herself. Warren has mastered the art of public hand-waving and shrill histrionics, but it amounts to nothing of substance.

I wonder if Senator Warren has looked at a credit-card statement lately. A typical credit card from a large bank will charge over 22% interest on unpaid balances, but that same bank pays out less than 1% interest on savings accounts and maybe 2% on a multi-year CD. To get those 4.5% CD rates, you have to open an on-line account, something many seniors are not comfortable doing. They’d rather do their banking face-to-face, in person at their local branch. That limits them to maybe 2% on a CD, if they’re lucky.

Seniors have traditionally counted on the safety of fixed-income instruments, like bank CDs, to be the bedrock of their retirement income, after Social Security, especially now that most private companies no longer offer pensions. Let’s look at an average, normal middle-class household. They have two kids, two used cars in the driveway and a modest home. Over their 30- or 40-year marriage, they’ve managed to put away a middling $200k in the bank. At 5%, a CD would pay them $10,000/year, or $833/month. That’s an important sum to a household like this. At 2%, ($333/month), it’s a budget-breaker.

It doesn’t matter to Senator Warren. If she was even aware -- and, no doubt, she’s not -- that $500 difference ($833-$333) is just another dinner at the Capital Grille in downtown Boston.

So, where is Senator Warren on this? How come charging 23% for unpaid credit card balances while offering 1% on savings is okay with our “consumer financial watchdog?” It’s pitifully obvious that Warren and her liberal ilk have absolutely zero clue about any of this. They don’t know what financial challenges real middle-class people face on a daily basis, nor do they care in the slightest. Her kindred spirit, Bernie Sanders, owns multiple homes, is financially independent, has gotten rich from public money, yet all he does is criticize, regulate, and over-tax the private companies that employ his constituents. Greenies like John Kerry fly in private jets and rationalize it, while Gavin Newsome dines maskless in pricy French restaurants.

Warren is totally invisible on matters that truly count to average Americans. Like virtually all liberals in power positions, she talks purely for public effect, but accomplishes nothing. She doesn’t even try. She has disappeared completely.

Image: Tim Pierce

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