Marilyn Geewax who appears to be NPR economics editor weighs in on the problem of low interest rates on Weekend Edition today:

Interest rates have been at very low levels ever since the financial crisis hit in the fall of 2008. The shock caused the stock market to plunge, credit markets to freeze up and housing sales to stall. To help bolster the economy, the Federal Reserve decided to drive down interest rates.

Low-cost loans helped make housing more affordable, and made it easier for businesses and consumers to get loans. But the strategy of propping up borrowers came with a cost — and savers had to pay it.

When borrowers are paying low interest rates, the banks that lend them money aren't getting much in return. So in late 2008, savers who put money into financial institutions in the form of CDs did something good for the economy: They helped make cash available for loans. But they did not get much of a reward in the form of interest payments.

In the radio story this is followed by much pissing and moaning about how it was the evil borrowers who got us in to this mess in the first place and how the virtuous savers are being punished now.

The villain in this drama is the Fed which has lowered rates and robbed savers of their due rewards. The implied solution: Now that the economy has stopped shedding jobs - well almost stopped shedding jobs - and the financial sector is doing just fine we need to raise interest rates.

Now Wonks Anonymous is a saver himself and feels the pain, particularly since everyone is telling him that he should start putting his assets in investments that are heavy on the bonds, certificates of deposit and so on.

Wonks Anonymous also believes that the Treasury and the Fed are showing a disturbing lack of imagination and good sense in their handling of the whole recovery thing.

What we have here is a failure of capital markets. Everyone, particularly banks, wants to hold cash or extremely liquid assets - that would be short term Certificates of Deposit such as Marilyn Geewax herself recommends. We have considerable savings - in Wonks Anonymous humble opinion we could use more - the problem here is that our financial markets are not doing their job.

Although the bonuses continue and New York City is just fine, the financial markets are not moving savings to investors who would spend them on profitable projects that would produce high returns to reward savers.

As a result we have a slow economy, low returns to savings and high unemployment. All that the Fed and the Treasury can think to do in this situation is to cram even more money down the throats of the banks in the hopes that some of it will pass through.

Wonks Anonymous has a better idea which he originally proposed here. Someone needs to use the savings that are piling up as cash. We cannot just take our money and bury it in the fields as someone in the New Testament did. if no one else will do it, there are plenty of worthwhile public investment projects that the Government can undertake.

Of course the administration allowed itself to weigh in with an absolutely anemic stimulus package, mainly to satisfy the likes of Senator Gregg and others who suddenly developed a fear of deficits caused by Democrats. We can't run a deficit because that will put us in the debt of Chinese.

Guess what.We have plenty of savings. We do not need to borrow from China. All we need to do is sell government bonds directly to the public. We need small denomination, long term bonds that offer say 3% real return which would probably be a better deal than most of us are getting with our current retirement savings.

Or we could just raise interest rates and idle more workers and factories. That will return us to prosperity for sure.