muses of the moment

January 5, 2010

Money Market Funds

Filed under: Bank bailout, Economic Crisis, The Banking Crisis, The Federal Reserve — totallygroovygirlfriday @ 8:16 am

Zerohedge (.) com has a very interesting post about new measures being proposed for money market funds.

Hey, listen up, this affects the money market account and CDs at your bank.

Click here for the whole post.

I am watching this closely.

A couple of thoughts:

Will the government announce this change or does the public find out about it on the first bank run?

If the $3.3 trilllion money market is now less liquid, does the amount available now diminish (as everyone takes out money with these new rules) and thus the revolving credit for business associated with it. (i.e. Does this change cause even more frozen credit than we already have for small business?)

Since they are considering these new rules, the problem is not fixed. A future bank run on money markets is still possible. Will the US gov step in next time or are these rules “the solution”?

Banking has completely changed in the US and no one is talking about it. It will come to a point were you will have thousands of dollars in your 401k and money market accounts but if everyone wants their money at the same time, you only get a portion of your savings. It is a new world where access to your money is as important as how much money you have. A million dollars you can not access to live equals zero dollars.

Is interest earned on money held at a bank available for withdrawal just a thing of the past?

These rules hurts savers yet again. Savers will have no “safe way” to earn any interest, let alone enough interest to keep up with inflation. These rules will hurt those on fixed incomes, our aging population. The retirement preached to you in 1999 is an illusion. Protect your investments/savings now.

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