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On METAR some one posted a quote from Paul Krugman on the effect zero percent interest rates have on retirees.

In a different interview, the interviewer asked Krugman if he cared that retirees and those on fixed incomes were harmed by bank interest rates at virtually zero. Krugman shrugged and said with a smirk, "No, I don't care about them at all." I was really angry about that.

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It's been a long time since anyone tried to retire on a 100% fixed income portfolio.

About 20 years ago at the height of the dot-com market, there was a poster named "hocus" who tried it. He went nuts.

https://www.retireearlyhomepage.com/rob_failure.html

Hocus's website appears to be still active, unless it's controlled by a bot.

https://arichlife.passionsaving.com/2021/05/06/rob-please-pr...

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There was a time in the '70s when you could get CDs paying well over 10%. Some got into those in a big way. Some probably tried to retire on the interest.

Of course they have seen a long slow decline. If you stuck to the plan and lived long enough it probably ended badly.

Its a reminder to review and adjust with the times. Change is inevitable given enough time.
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There was a time in the '70s when you could get CDs paying well over 10%.

Probably the same time when inflation was over 10%.
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There was a time in the '70s when you could get CDs paying well over 10%.

When I was at Exxon in the early 1980's there were guys taking $100,000 loans from their 401k to purchase brokered CDs with 17% yields. Some of those banks went under, but as long as you FDIC insurance, all you lost was a few months interest.

One manager just below the VP level put over $500,000 in a Houston bank (FDIC protection at the time was limited to $100,000. He lost a good piece of it.)

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Some of those banks went under, but as long as you FDIC insurance, all you lost was a few months interest.

Yes, that was the savings and loan scandal of the age. Junk bonds came available paying good yields. Savings and loans, insured by FSLIC, found it necessary to pay higher interest rates to avoid the flight of their deposits to junk bonds and other high yield investments.

They mostly did mortgage loans to members and could not charge enough interest on those loans to pay the higher yields. But they were government insured. So the feds picked up the bill. And some savings and loan executives went to jail.
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At one point, you could buy 30 year treasury notes with 13% interest - 1983? . Just think of all the loot you collected - then cried in your beer after 30 years when you could get a few percent on a new one.

t
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When I was at Exxon in the early 1980's there were guys taking $100,000 loans from their 401k to purchase brokered CDs with 17% yields. Some of those banks went under, but as long as you FDIC insurance, all you lost was a few months interest.

One manager just below the VP level put over $500,000 in a Houston bank (FDIC protection at the time was limited to $100,000. He lost a good piece of it.)



IIRC, the FDIC insurance was "per entity" or some such wording. So, you could get insured to the max in one account of John Smith, another of J.W. Smith and still another of Mr. and Mrs. John W. Smith. So, it took a small bit of care to make sure large amounts were insured, but you could do it.
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CuriousQ writes,

IIRC, the FDIC insurance was "per entity" or some such wording. So, you could get insured to the max in one account of John Smith, another of J.W. Smith and still another of Mr. and Mrs. John W. Smith. So, it took a small bit of care to make sure large amounts were insured, but you could do it.

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Yeah, the smart ones were putting $100,000 each in the husband & wife's account. The guy with the $500,000 problem put it all in his personal checking account a few days before the bank went under.

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Hocus is still obsessed with the same topics. Crazy.
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