So with all the criticism of ZIRP we've seen lately, lets take a look at just who the Govt is no longer giving free money to. As you can see from the chart above, US TSY CDs are held in roughly equal amount by three groups of savers:
The Federal Govt itself (including the Fed because no matter what the orthodoxy or Fed truthers say, the Fed is a Govt agency)
Domestic Savers (including State & Local Govts)
So if you are concerned about the economy not getting enough free interest income from the Sovereign, thereby causing you to oppose ZIRP, you should probably have a superficial idea of who gets the free money if Govt interest spending goes up.
If we look at the article that provided the Chart above, we'll find those sections further broken down. Here is the foreign sector:
Before we even start looking at the Domestic owners, ZIRP critics have to acknowledge that foreigners have more US TSY CD savings than domestic savers. Pretty tough political sale to convince a fairly anti-foreign (especially against China) electorate that we should be giving more free money to foreigners unnecessarily.
Now that site didnt break down the domestic component into enough detail so I found another site which is from 2013 that does just that: http://www.factcheck.org/2013/11/who-holds-our-debt/
You can see their sources clearly at the bottom of the page.
The remainder of the total federal debt is spread among mostly private, domestic investors, including 6 percent owned through mutual funds, such as money-market funds. Another 3 percent is owned by state and local governments. The remaining 17 percent is spread among banks and other depository institutions (2 percent), owners of U.S. savings bonds (1 percent), private pension funds (3 percent), state and local pension funds (1 percent), and insurance companies (2 percent), with the remaining 9 percent held by various “individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors,” according to the Treasury.According to this, just about 14% of all TSY CDs outstanding are held by Non-Federal Govt pensioners and individuals. So for every 14 cents some people want to give to pensioners and individuals you have to give 86 cents to foreigners, the federal Govt itself, banks, and insurance companies : (Note: the percentages are different if you ignore the what the Federal Govt owes itself).
I cant imagine a more wasteful way to fund pensions and individual savers. Give $86 to people who the Govt should not be giving any free money to in order to give $14 to pensioners and individual savers who I would argue are more likely to be the already wealthy. I dont think alot of working class people are buying alot of TSY CDs given their non-existent savings, but hey maybe someone can provide some info on this to change my mind.
But if you are really concerned about Pension funds, the numbers are even worse. You need to convince the country to give $10 to foreigners, the Govt, banks, wealthier individuals and insurance companies just so we can give $1 to pension funds.
This is a political loser.
If you want retirees to have more income, then advocate for that. I support that. But if you think its a good idea for the Govt to use whats probably the most regressive way to spend dollars possible in order to give free money to pensions, then you are on your own.
P.S. Personally, I want to do away with the hodgepodge system of Non-Sovereign pensions and just have a universal retirement system paid for and funded by the Feds, so I dont really care that pension funds arent working.