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Online Savings & Money Market Account Rates 2021

Online Savings & Money Market Account Rates

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Wall Street Analysts Are Writing Their Own Fake Narrative About Inflation

I cannot do it anymore.   I just cannot watch CNBC or Bloomberg.   It isn’t because the market is falling (it is).   And, it isn’t because I cannot bear to hear the usual batch of cheerleaders (so-called “analysts”) extolling the virtues of being long in an uncertain time.

Unlike 99% of the analysts, Joe Lavorgna is about as reasoned of an analyst as CNBC ever has as a guest.   Yet, he too denies inflation and says that the Fed needs to relent and “let the economy run hot.”

The problem with Lavorgna’s reasoning is clear: the Fed has a dual mandate of full employment and price stability.   Price stability is achieved by fighting inflation and ensuring that the real value of the US currency maintains its current level of purchasing power.  If $100 today becomes $102 in a year, but has the purchasing power of $90 today, the economy falters.  People need to earn enough in  their savings accounts and other risk-free investments in order to ensure that they don’t lose the value of their money because that will cause the wealth of the nation (and consumer confidence) to collapse.

Were Chairman Jay Powell to allow the Federal Reserve’s mandate to become the growth in the stock market (as Wall Street would like) and cheap borrowing costs for real estate developers (as the President would like), the Federal Reserve would be risking a diminution in our nation’s wealth in order to get a continued rally in the stock market.  

But, Wall Street’s cheerleaders are pushing for this short-term gain over long-term economic security  when they try to explain that there is no inflation.  

Let’s clear this up:

First, there is inflation.   Annual rates of inflation are calculated based on the Consumer Price Index, issued monthly by the Labor Department’s Bureau of Labor Statistics.   The CPI number issued on December 12, 2018 indicates a move from 246.669 to 252.038 from November 2017 to November 2018 for an inflation rate of 2.20%.    This rate is still historically low, although much higher than the measure for the last several years.

The CPI indicator is controversial for many reasons, but one thing that economists universally agree upon is that it is backward looking.  The Fed, therefore, looks at a variety of other factors many of which are going to try to measure incipient inflation.

Second, there are all sorts of reasons to believe we could have serious inflation in 2019 that will not show up until it is here.

I see at least four significant inflationary pressures in 2019 that weren’t present in 2018.  

  • Continuation or escalation of the trade war with China is inflationary as we have long relied on China for all sorts of low cost items and inputs.   Tariffs placed on those items will cause the cost of goods to increase or purchasers to find alternative - and more expensive – replacements.
  • Brexit and its March 29, 2019 deadline present a range of possible outcomes.   A hard Brexit or anything that might resemble it will be tragic for the British economy, but the disruption that it will cause in global markets will be inflationary.
  • Commodity prices collapsed in the second half of 2018.   If oil does anything other than continues to fall in a straight line, transportation costs will increase.   If other commodities bounce, input costs will rise.
  • Minimum wage has just increased on January 1, 2019 in 20 states (including California and Florida) and a bunch of other cities (including DC).   This affects the wages of 17 million people.   In New York City, the cost of employing someone is now $15 an hour.   If you don’t think that higher wages get passed on in the form of higher costs, come visit New York.

When analysts stop their market cheerleading and look at the same risks that the Federal Reserve and Jerome Powell are looking at, the inevitable conclusion is that the Fed needs to continue to hike rates in 2019.

Our Predictions for 2019

Rate information contained on this page may have changed. Please find latest savings rates.

Because my predictions for 2018 have proven to be largely correct I have been emboldened to release my predictions for the coming year.

I correctly predicted online savings and money market rates going above 2% before October 2018, online one-year CD rates going above 2.50%, and 5-year rates going to 3.50%.  I am now predicting that online savings rates go above 3% in 2019, and that 1-year rates will go above 3.50% and 5-year rates above 4.50% in 2019.  The Fed is guiding that way.  And, even if Trump tries to remove Jay Powell, rates will continue to move up and it is good for the country to normalize interest rates.  If you follow my prediction, you will basically continue to be in savings accounts and you will not lock into CDs longer than one-year.

I also predicted the stock market’s assent and its decline, as well as the decline in bitcoin.  Bitcoin is going below $1,000 and it is never coming back.  The stock market will go much further down over the coming months, but it will ultimately end 2019 a little higher than where it is right now.  Bond yields will climb and real estate will continue to fall.  Cash in the form of savings and CD rates will match the stock market’s performance in 2019, and outperform everything except perhaps oil, gold and some other precious resources (that are all starting the year at such low bases that they have nowhere to go but up). 

My 2018 prediction about the 25th Amendment was premature and based on hopeful speculation.  It didn’t come to pass in 2018, but it will in 2019.  Pence will also become implicated in the Mueller probe, leading to his quick resignation or impeachment.  Pelosi’s elevation to the Presidency will be the impetus that causes the stock market to stop falling.

And, just like 2018, we’ll be happy and surprised at the end of the year that the country is still intact at all.

Happy New Year.

Now Is A Good Time to Build a Wall - Around Your Savings

If you are like most Americans, you have just learned that you have been kidding yourself for years.

We believed that the economy could grow quickly in spite of the 2016 election outcome.   We believed that the Republican Congress could grow our economy by passing a tax law that ignores the national debt and penalizes residents of blue states.   We believed that fights with our allies were good.   We believed that picking a fight with the Chinese would be in our long-term interests.  We even believed that Facebook could be a technology leader when their only innovation was to abuse personal data in order to provide a forum for feeding lies and deception to the most vulnerable.

We’ve just experienced a December that has been more brutal than any since 1931.   Everything comes home to roost quickly when all major US indices fall 7% in one week.

When we last experienced a stock market fall of this magnitude in one week (September 2008), we were a lot closer to the market top than we were to the bottom.

In 2018, cash has now outperformed everything.

I am not a proponent of building walls.   They keep good ideas out and serve political gains for those who demand them.  But, things could clearly get a lot worse in 2019, and this just might be the time to build one around your future and your savings by raising your allocation to cash.

Check the best online rates here.

See rates at banks near you here and at credit unions near you here.