About That Letter My Dad Got in the Mail Friday

Pay a Bank to Hold Your MoneyMy father is 87 years old. He’s in great shape, drives on his own, plays cards with the guys each afternoon, and has basically been enjoying retirement since he sold his business when he was 65.

Like all retirees, he and my Mom have been living off their savings for years.

And like millions of Americans, the low interest rates we have been enduring since the Federal Reserve decided back in 2008 that it was best to bring rates down to historically low levels (and keep them there for six years) haven’t been kind to them.

But last week, the letter we got in the mail, well, it was the last straw.

My folks have some of their money in the wealth management division of one of the largest banks in North America. On Friday, we received a letter from them that said the bank would start charging a fee of $500.00 a year if the balance in my parents’ accounts fell below $125,000.

Yes, you got that right. If my parents keep less than $125,000 in their accounts at this (essentially) brokerage arm of the bank, they will be charged $500.00 a year for the bank to keep their money.

Nice. (If you are a small business owner, imagine treating your customers like that!)

The letter ended by saying that if we are not happy with the bank, we can transfer the money to another financial institution by a certain deadline date and the transfer fee will be waived. Nice, again.

Dear reader, I have been writing to you for months that my view is essentially that money is not worth anything anymore. (See “Is Money Really Worth Anything Anymore?”)

Last week, the European Central Bank said it would be charging negative interest rates if banks parked money with them overnight. That means banks in the eurozone now have to pay their central bank for the safekeeping of money each night.

But the stock market, it keeps moving higher and higher almost every day (or should I be saying riskier and riskier every day). High-end real estate, it keeps moving higher too. Collectible art and wine, they are going through the roof.

Have you been to Miami recently? The condo boom there is like the one from 2005 and 2006 on steroids!

Going back to money and considering inflation, we are being punished for keeping money in the bank because, if I were to guess, the Fed would like to see us invest more and borrow more instead of keeping money in the bank.

And going back to my Dad, he was born in the Depression era. At that time, if you had money—any money—you were doing better than 99% of the population. Now I need to explain to him that he is being punished for having money and not non-financial assets?

Does any of this make sense? Of course not. The game will only go on for so long. If the Fed has really printed so many new dollar bills that we need to pay to have a bank hold them, I can’t see how this picture will end well.

Yes, I keep buying gold every time it dips, because if money isn’t worth anything anymore, surely gold must be worth something sometime soon. I may be wrong on this today, but I believe I will be right on it in the months ahead as the current situation of being punished to have money in the bank unravels.