Earlier we angered some folks when we pointed out that you shouldn’t blame Bernanke for low interest rates on your savings deposits, but rather blame the lack of growth, and the incredible demand for risk-free, liquid instruments.
It turns out, we could have made that argument in chart form very easily.
First, here’s a look at 3-month CD rates.
As you can see, and as you should know, CDs yield zilch.
Now, check out this chart.
It shows CD rates again in blue vs GDP/savings deposits in red.
Basically, the yields on CDs undulate in perfect rhythm with the proclivity of people to put money in savings deposits. As more people want to put money in savings deposits (red line declining) yields fall, which is exactly what you’d expect. As fewer people are inclined to deposit money in banks (red line rising) yields rise.
Want to know why yields are lower than ever before? It’s because people are putting money in banks like never before.
See our original post on savings here.