The Federal Reserve has a regulation called regulation d that declares it illegal to pay a free market rate of interest on what they declare “demand accounts”, these include savings accounts, CDs, and money market accounts. This regulation has been effect, under different names, since the Federal Reserve became the “sacred cow” of the United States government. Originally it was called Regulation Q.
This law was enacted by the Federal Reserve to keep banks from paying a fair, reasonable and morally correct interest rate to the average working person that is trying to make a safe and sound investment without undue risk of losing their money. The law forces the general working public to invest in stocks, bonds, Mutual funds and other risky investments that are more expensive and require financial knowledge that the average working person either does not have the time to learn the expertise of finance and investing or the ability to understand the complicated world of finance and investing.
By reforming the Federal Reserve and the elimination of regulation d banks and lending institutions could and would pay a fair, “free market”, rate to all savers and even beginner savers could realize a fair, reasonable and moral return on their savings investments.
Any reasonable person examining this regulation would realize that the government made this law to favor and benefit the banks and lending institutions. It is a totally one sided law that discriminates against the citizens that wish to get a fair, reasonable and safe return on their savings, CDs and money market funds. They had to make it a law in order to enforce this unreasonable, unfair and morally corrupt practice. By making it a law the banks could blame the government for the unfairness and collect their high interest rates on auto loans, personal loans and mortgages. No one wants to argue with the government and our government representatives do not want to haggle with the Federal Reserve. The Federal Reserve uses the excuse that people can withdraw their “demand accounts” any time they want and leave the bank with low funds. This excuse no longer works in the real world. With the Federal Reserve being the money supplier to banks they no longer need the savers accounts to stay in business.
With a fair, reasonable, “free market,” interest rate being paid to people with savings accounts, CD’s, and money market accounts people would have interest income that is either spent in the economy or left in the account to draw more interest. The interest income is taxed and put back into the government to be used to pay down the national debt. Money left in the hands of the banks and bankers does not always get back into the economy or get taxed.
This type of Federal Reserve reform would not only right a wrong that has been perpetrated on the American public but it would be good for the citizens, the county and the economy. Make interest rates on “demand accounts” fair, reasonable and equitable with credit cards, loans and mortgages. The working person’s money should be considered equal in value to the banks, legal moneylender, and lending institutions