Rep. Garrett to Moneynews: Bernanke Forces Retirees Into Risky Stocks

Thursday, 28 Feb 2013 05:55 PM

By Glenn J. Kalinoski and David Nelson

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U.S. Rep. Scott Garrett says Federal Reserve Chairman Ben Bernanke's ultra-low interest rate policy is hurting senior citizens by forcing them out of the safety of fixed-income investments and into much riskier stocks.

“With regard to seniors, the Fed’s loose monetary policy and basically pegging the interest rates where they are right now keeps them at historically low levels for an extended, protracted period of time,” Garrett told Newsmax TV in an exclusive interview.

The low interest rates, designed to spur economic growth, carry with them “huge negatives,” the New Jersey Republican said.

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“The seniors, who have done everything right in their life, worked hard, saved money [and] put it away for their retirement, and now, in their proverbial golden years, are relying upon those savings, can’t do what seniors used to do,” Garrett said. “And that is get a few percentage points of interest on their money.”

Garrett, who sits on the Financial Services Committee and House Budget Committee, recounted his exchange with Bernanke during his testimony on Capitol Hill.

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“The Fed values money at basically no value, which is why interest rates are so low,” Garrett said. “And when I asked the chairman … what should seniors do, he said maybe get out of fixed instruments … and go into the stock market, which he is proud of – the fact that the stock market is going up.”

Garrett said seniors should never be advised to take money out of secure investments and invest in “something so insecure as the stock market, which we see goes up today and down tomorrow, because they have no opportunities to gain wealth elsewhere.”

He said it is both bad advice and bad monetary policy that seniors are being forced to choose between risky investments and safer alternatives.

Garrett also questioned Bernanke on Fed policy and its impact on the housing sector.

“He has said that it was because of bad monetary policy that we had a strong housing market in the past,” Garrett said.

“And now it’s because of Fed policy that we’re having a strong housing policy now. But he said that in the past — it was bad action that caused the bubble. Many economists would say that it was because of loose monetary policy that housing prices just went off the charts above historical norms and that did, in fact, create the bubble," he said.

“He can’t have it both ways. He can’t take credit for one thing and not take responsibility for the other.”

Garrett also expressed his opposition to sequestration.

“I voted against the Budget Control Act because I could see this day coming,” he said. “[The Act] had the goal of setting up this so-called ‘Super Duper’ committee that was supposed to resolve all of the fund conflicts in Congress that Congress has not been able to do for the last three years, and they were supposed to do it in about three weeks. Had they been able to do that, we would not be in this situation.”

Garrett described the sequester as President Barack Obama’s idea, something that he is now “backing away from entirely.” He went on to mention how House Republicans have twice passed bills that would change how it would go into effect.

“Of course … the Senate is where all good bills go to die,” he said. “We’re still waiting for the Senate or the president to propose some alternative.”

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