Word: savers
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Dates: during 1970-1979
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...thrifts. With a 13% inflation rate, people are being driven into investments that offer more than the paltry 5¼% or so that savings banks and savings and loan associations are allowed to pay on passbook accounts. The result is that these traditional homes of the small saver are fairly scrambling for deposits. New customers are being lured by both familiar freebies (toasters, tickets to shows) and new appeals. For example, New York's big Bowery Savings Bank (assets: $5 billion) now has its longtime pitchman, Yankee Slugger Joe DiMaggio, asking folks to take money out of stocks...
...limit the payout on their passbook accounts to 5% in commercial banks and 5.25% in savings institutions, which is less than half the current rate of inflation-and much less than a higher-roller gets for investing $ 1,000 or more in a money market mutual fund. The small saver's squeeze is summed up in a Citibank anti-ceiling advertisement: "Deposit $500 with us today and we'll give you back $475 next year...
...proposals will be an eight-year "rising rate" certificate of deposit in amounts as low as $500. The interest will start at 6% (6.25% in savings banks) and rise gradually to 8% (8.25%) over five years; a saver who leaves $500 on deposit over the full eight years will get $386.17 in interest, vs. $244.06 in a regular 5% bank account. Savers will also be able to buy a five-year certificate pegged to the average five-year Treasury Note rate, currently 9.2%; interest on the new certificate will be 1.25% less than that rate, or 1% less if bought...
...tumble out of favor and decline in price. So where is the perplexed American investor to park his extra cash and protect its value? Certainly not in a savings account. Had Phineas T. Barnum lived today, his famous dictum might well have been: There's a saver born every minute. In the inflationary 1970s, savers are suckers who stand to lose. If inflation should continue at February's 15.4% rate, every dollar put into a bank at 5¼% interest will become 91.4? in real money a year from now-and a lot less than that after taxes...
...past year many charter tour operators have been forced out of business by the new, deeply discounted fares. The charter flights (and later the Laker flights) are what forced the reductions. The CAB has refused to protect the public by insisting that all Super Saver-type fares must exist for a specified lifetime (such as a five-year minimum). Once the charters are gone, you will see the discounts disappear quickly, and the airlines will have the public right where they want it paying high fares without the option of the less expensive charter flights...