Charles Schwab wrote an editorial to The Wall Street Journal last week entitled, "Raise Interest Rates, Make Grandma Smile." The founder and chairman of Charles Schwab Corp., wrote, "For America's 44 million senior citizens, plus tens of millions of others who are on the threshold of retirement, last month marked a watershed moment that is worth celebrating. At the end of October, the Federal Reserve announced the first step in returning to a more normal monetary policy. After nearly six years of near-zero interest rates and quantitative easing, the Fed is ending its bond-buying program and has signaled a plan to eventually begin raising the federal-funds rate, raising interest rates to more normal levels by 2017. U.S. households lost billions in interest income during the Fed's near-zero interest rate experiment. Because they are often reliant on income from savings, seniors were hit the hardest. Households headed by seniors 65-74 years old lost on average $1,900 in annual income over the past six years, according to a November 2013 McKinsey Global Institute report. For households headed by seniors 75 and older, the loss was $2,700 annually.... In total, according to my company's calculations, approximately $58 billion in annual income has been lost by America's seniors since 2008.... Because it creates a direct shot of consumer income that in turn becomes consumer spending, the return of normal market-based interest rates will increase the velocity of money in ways the policies of the last six years have not. That is a good reason to encourage the Fed to be even more aggressive and normalize monetary policy as quickly as possible. But today, let's celebrate the Fed's first steps in that direction and the monetary benefits they'll have for seniors and savers." In other news, Bloomberg ran a piece, "Fed Looking at Segregated Accounts as Rate Increase Tool," which reads, "The Federal Reserve's examination of whether to create separate accounts that banks could pledge as collateral for funding is seen by analysts as giving policy makers the opportunity to greater influence money market rates. Minutes released this week from October's Federal Open Market Committee gathering included a discussion of the potential to allow banks to utilize their over $2 trillion in excess reserves held at the Fed as a form of cash collateral for accounts they would offer to private investors.... "This could be a way for money market funds and others to put cash in a bank account that the banks keep segregated and are backed by Fed reserves," said David Keeble, head of fixed income strategy at Credit Agricole SA in New York. "This would remove excess liquidity from the system, effectively allowing non-banks to use the interest rate on excess reserves through an agent.""

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