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The Feds. The Banks, those who kind of control the money.. They try hard to keep the economy moving, with low interest rates.  They are so low.  Why have years of artificially low rates for mortgages and business financing not “stimulating” us into financial recovery?

Well I have some opinions.  I believe they have ignored a few basic facts of human nature.  Here we go…

1) While they have kept the cost of financing low, the investment bank and hedge fund speculation takes prices on commodities like food, oil, gas, raw materials, etc. to new heights.  People cannot spend on other things, and if they have discretionary money, they sit on it in fear of what is going to happen.

And in spite of what you are hearing out of Washington, inflation is roaring back in a BIG WAY!!  Inflation, it keeps rearing its ugly head.  You cannot rely on the Consumer Price Index ( CPI) as that for whatever reason ignores the prices of food and gas.  When the prices are up on food and gas, people do not purchase as much.

Yesterday, I paid $4.39 for gas in Plainfield, Illinois.  I am not sure what you paid, but I am guessing you were in the neighborhood of $4.00.  We hear from our politicians that it is due to trouble in Egypt and Libya, or somewhere else in the world.  Do you believe that??

The real reason gas prices have jumped ( yesterday .30 in my market),  is because speculations driving up the prices of gas and oil.  Food goes up because it takes transportation to get it to the store.  Until the greedy bankers and hedge funds get under control, your cost of living will go up.  I guess what was his name from the movie WALL STREET.. Gordon Gecko.. he said GREED IS GOOD.  Who’s greed?

2) When people do not buy as much, there is less demand for things that companies sell.  And when sales drop, people drop ( meaning you are terminated). When people lose jobs or are in fear of losing their jobs, they buy less.  Thy cycle continues.  It does not take a genius to understand that lowering interest rates won’t help the person who is afraid to buy due to uncertainty.

3) With rates so low.. many people who are retired and live off of bank savings account or Certificates of Deposits (CD’s) are scared and are unable to buy things when they are getting such a lousy return.  How are you supposed to live on a return of less than 1%.

What kind of purchases are you going to make when you are afraid of dipping into your principal?  No matter how low they take interest rates.. people are not going to gain a magic confidence.  People are really concerned about their future.

If you agree that we are in for some uncertain financial times, then YOU have to combat the potential financial disasters for your family.  You need to PLAN for the FUTURE.  YOU cannot change what the politicians and banks do.  YOU CAN control and change what you do.

If you have not updated your plan recently  Do not put it off.

Thanks for reading.

Eric Wilson is an insurance agent in the Chicago area.  He can be reached toll free at 888-448-5370.