Denninger And Charles Schwab Explain Why The Fed Is Corroding The Culture

Denninger points to a recent op-ed by Charles Schwab

The most striking quote to OS was this:

The Fed's super-loose policy has driven down the security and spending power of savers, particularly those in retirement who played by the rules during their working years and now depend on the earnings from their savings for a decent quality of life. As a result, savers and investors are being forced to take more risk with their money as they hunt for higher yields.

'The ones who played by the rules' for all those decades--the ones who stayed married, raised the kids, worked and worked and worked, often serving in the military (and sending their kids off to do the same), attended and supported their churches and synagogues, saved and scrimped and delayed gratification so they wouldn't be a burden to their kids in adulthood, to have something to spend on the grandkids, maybe even pay school tuition so the grandkids wouldn't have to go to public schools--those folks.

Those folks have been treated shabbily. They kept their money in CD's and Treasury securities, or in muni bonds, for safety of principal, for the insurance on their accounts. Now, not only have their income streams from the principal saved over the years dried up, but the value of those dollars themselves are now being deliberately eroded.

So, what does this mean for the culture? OS believes it breeds cynicism, and erodes hope. Virtue is its own reward, to be certain. Those folks who live virtuous lives have better lives than those who don't--such as meth addicts, to cite an extreme example. But if the end result of all that virtue and saving and investing is a worrisome old age of borderline poverty, it becomes more difficult to make the argument for virtue, thrift, ambition, self-improvement, etc. If the banksters always win, and are the only ones who prosper, the social glue of shared values begins to melt away.

OS listens to hip-hop urban radio a few times a week, not because he likes it, but because he wants to listen in on what is being said. It's not pretty. It is dark music and darker poetry, focused on raw materialism and hedonism, usually degrading to women, and always focused on short-term gratification. The sub-message seems always to be: What the hey, there is no future, and virtue is for chumps. Live for today, and for yourself.

Visit the neighborhoods from which this music emerges, and it is obvious the glue of shared values melted away long ago.

Unless we wish that cultural rot to spread, we would do well to pay attention. And we'd better be prepared to talk once again of virtue as its own reward. It will be a tough sell in this climate.

And, if you don't believe OS, or Charles, or Karl--then maybe Robert Reich will tell you what you need to hear. Same message, from a far different part of the ideological spectrum.