How Low Interest Rates Are Holding 144 Million U.S. Workers HostageAre the long-term retirement plans of working Americans being held hostage by the Federal Reserve?

If the point of quantitative easing was to stave off a recession and spur jobs growth, I think it’s fair to say the Federal Reserve’s $85.0-billion-per-month money-printing scheme has been a failure. At the very least, I’m not so sure the money was well spent, and that the end does not justify the means.

I enter as evidence almost $4.0 trillion that the Federal Reserve has dumped into the U.S. economy since 2009. To put that into perspective, the average unemployment rate that same year was around 8.5%; that translates into roughly 13.1 million Americans being out of work in 2009. Fast-forward to today, and the unemployment rate stands at an unacceptable 7.2%, or 11.3 million Americans. (Sources: “Civilian Labor Force (CLF16OV),” Federal Reserve Bank of St. Louis Economic Research web site, last accessed October 24, 2013; “The Employment Situation – September 2013,” U.S. Bureau of Labor Statistics web site, October 22, 2013.)

It could be argued that over the last four years, the Federal Reserve has printed off $4.0 trillion to create 1.8 million jobs.

But at what expense? Since the stock market crash in 2008, the Federal Reserve, through its use of quantitative easing, has sent U.S. interest rates towards near-record lows. In fact, the Federal Reserve has kept the federal funds rate target between zero and 0.25% for almost five years.

That’s terrible news for anyone looking to save money, and near-record-low interest rates make it virtually impossible for people to save money to meet their retirement needs. Sadly, for those nearing or already in retirement, the artificially low interest rate environment has taken income out of fixed income investing and devastated their retirement savings.

So much so, in fact, that 37% of middle-class Americans say they’ll never retire. On top of that, 42% say it’s impossible to pay monthly bills and save for retirement. (Source: “Middle Class Americans Face a Retirement Shutdown; 37% Say ‘I’ll Never Retire, But Work Until I’m Too Sick or Die,’ a Wells Fargo Study Finds,” Wells Fargo web site, October 23, 2013.)

Thanks to a near-zero interest rate environment, the retirement plans of today’s 144 million working Americans have been decimated. But in the eyes of the Federal Reserve and the U.S. government, it’s been money well printed. In a nutshell, 144 million Americans have had their retirement savings held hostage so the Federal Reserve and U.S. government can point to marginal jobs growth.

But even that is debatable. Keep in mind that millions of Americans have stopped looking for work and are not counted among the unemployed, suggesting more people today are out of work than before the Federal Reserve stepped in to “save” the U.S. economy.

Does the end justify the means? While it’s great that the American economy is creating jobs, it’s tough to say whether it’s been worth almost $4.0 trillion and an income environment that has been punishing the 144 million working Americans who have spent years saving for retirement.

Sure, the S&P 500, Dow Jones Industrial Average, and NYSE are enjoying a record run, but again, middle-class America is missing out. Only 24% of middle-class Americans are confident in the stock market as an investment vehicle for retirement, and 45% say the stock market doesn’t benefit people like them.

But with the S&P 500 up 23% year-to-date, the Dow Jones Industrial Average up 18%, the NASDAQ up 27%, and the Federal Reserve still printing off money and devaluing the dollar, the stock market is, without question, the place to be.

While investors still need to show caution and understand where they’re parking their retirement money, there are a lot of great investment opportunities out there right now, both domestically and internationally.

This article How Low Interest Rates Are Holding 144 Million U.S. Workers Hostage was originally published at Daily Gains Letter

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