The Daily Mail this morning is filled with hysterics about many savings accounts now facing zero interest rates, accusing the government of targetting help for borrowers (the reckless young people who created this whole mess in the first place because they don't care about morals or the family or the rule of law) by penalising the savers (the sensible old people who fought and died for this country, and had to scrape together everything they own with their own frail fingers).

Firstly, there are always winners and losers. If there were anyway of helping people without hurting others then it would already have been done. In times of crisis, those in control have to make an assessment of who needs help, and where is best to transfer that help from (whether its greater benefits paid for taxes, or great regulation which incurs costs to firms or whatever). The role of monetary policy (basically setting short-term interest rates) is to alter behaviour to control shocks to demand in the hope of maintaining steady (or equilibrium) levels of inflation and employment.

If demand-side inflationary pressures become strong, then interest rates will increase. This affects demand - people find it more costly to borrow, have less disposable income after mortgage payments have been removed, and find saving more beneficial. All of these things reduce the amount of money there is being spent, which eases inflationary pressures.

Currently, in the midst of the a downturn, where demand is falling, lower interest rates work along these same channels to achieve to opposite effects - more disposable income, easier borrowing, less incentive to save. While it is still effective (and with base nominal rates getting close to zero, it is reaching that limit) it is generally considered to most effect way of managing macroeconomic shocks.

The crucial point is that these are all short term changes. Once real variables are stabilised, interest rates will rise again. The issue that is getting confused here is that general idea that it is a good idea for people to save for retirement. It is, and and is also something that should be encouraged more as a long term goal. However, a government operates at the macro level, and while many individuals may suddenly find that their savings haven't grown as much as they expect this year and next year, they will also find (if they looked) that the recession that we are in, which will affect everyone, isn't as deep as it would be if governments (or central banks) had taken no action at all. Plus, savers have benefitted from higher interest rates during the last ten years when the economy has been doing well, which has come at the expense of borrowing and mortgage payers.

Plus, borrowers and savers aren't two different breeds of human. People borrow and people save over the course of their lifetime. In fact, many people do both at the same time, let alone during the lifecycle. Few people are Polonius. There will be times when interest rates benefit you and times when they don't. Overall, you probably do OK, given the long term nature of major borrowing and saving, and the short term volatility of interest rates.

So please, stop twisting sensible policy choices into a story about the government's attacks on the old and weak. Instead, go report on something you are well informed on, like the snow or some celebrity's battle with cancer.