Bill Bonner Pushing its key rate down to zero...the Fed gives its insider friends money for nothing. Trillions of dollars’ worth.  The outsiders reach for their wallets. They know they are being robbed, but they have no idea how...or by whom.  Instead of getting a fair return on their savings, they get practically nothing.  The idea is to force them into riskier investments. The Fed admits its strategy without shame or remorse. And it works. The poor Mom & Pop saver takes his money to Wall Street. And then, Barry Dyke author of The Pirates of Manhattan II: Highway to Serfdom explains what happens. He calls it “a biblical transfer of wealth...from Main Street to Wall Street.” Wall Street, the mutual fund industry and corporate America has hijacked America’s savings through 401(k) retirement plans. It uses workers’ savings in 401(k)s funded with mutual funds to fuel outrageous compensation packages, fund shaky companies going public, accelerate speculation and to finance the corrupt Wall Street business model. It is an unprecedented biblical transfer of wealth from Main Street to Wall Street and corporate America. It is an unprecedented transfer of economic and investment risk onto the little guy. Main Street America has been taken to the cleaners with 401(k)s. It is a biblical transfer of wealth which will take most Americans years to recover from. The major problem today is that there is no savings or patient capital for regular Americans. The US Commerce Department found savings to be around 1% of earnings during the 2007 housing bust, up to 8% in 2008, down to 5.8% in September 2010 and slid to 3.6% in September 2011. There is a major difference between saving and investing, but to Wall Street and the mutual fund industry the only way to save according to them is to put it into volatile highly- complex no-guarantee stock mutual funds. Putting money into a 401(k) is NOT SAVING. It is speculating. Here’s the proof. According to the Investment Company Institute 2011 Fact Book, Americans’ have 77.4% exposure to volatile equities in their retirement accounts. That is horrific. The Federal Reserve is at the heart of this savings debacle. By dropping interest rates next to zero, The Fed has forced Americans into volatile markets in search of yield. The only winners in this tragedy are the mutual fund giants, Wall Street and corporate executives with pay packages which would make King Solomon blush. In many respects this wealth transfer is worse than the Great Depression when people were more self- reliant and had a stronger family unit.  The Fed, the federal government, bankers, government workers and highly paid executives rarely speculate with their own fortunes the way Americans are forced to speculate in their 401(k)s. Mr. Dyke might have added that pushing money into Wall Street also pushes up prices on stocks, bonds, and other Wall Street products. At first, this makes the small investor feel smart. His ‘investments’ go up. Of course, not as much as the rich ‘1%,’ who own far more of America’s capital structure than he does. But negative interest rates create bubbles. The Fed is now inflating its third major bubble in the last 15 years. This time, in US Treasury bonds. When it blows up, a good portion of the savings of American households — locked in pensions, mutual funds and insurance programs — gets blown to smithereens. Then, there is consumer price inflation too. You can’t add $2 trillion to the nation’s base money supply without some effect on prices. It could take a while to show up, but it would take a doubling of consumer prices just to bring the current base money supply per person back to normal levels. And that assumes the Fed straightens up...and does no more money printing. And who will bear the hurt? The clever elite? Those who understand the hustle? Those who own gold...houses...offices and apartment buildings? Or those whose wealth is counted out in drips and drabs...from wages and meager savings? Oh Dear Reader...watch out! Regards, Bill Bonner for The Daily Reckoning