There is an atrocious fact squarely staring people at their faces without them being aware of its sad significance. Much less are the public officials concerned making them cognizant of its implications. And the banks are neither that eager to inform their clients about it. It is the inflation rate! The higher it is, the lesser buying power the peso has, the more money is needed to buy exactly the same things. In other words, the higher inflation rate is, the lower value the peso has, the lesser goods it purchases.
What is both interesting and depressing is what happens to the money Pepe and Pilar deposit in the banks. They have some extra pesos they want to save. So they go to the banks to deposit them. They do this not only to keep their money intact but also to earn some interest income. When after some time they need their money, they withdraw it with joyful anticipation to spend it, buy things with—especially on the occasion of the fast approaching Christmas season.
Oh yes! Their money became more in number upon its mere count. But what they do not realize is that their money in fact is less in worth and consequently also less in purchasing power. In short, precisely by depositing their money in the banks, people lose! The culprit is the inflation rate pitifully much higher than the interest rates given by the banks—irrespective of whether Pepe and Pilar gave their money for savings account or time deposits.
With the minimum savings deposit, the interest rates range from a high 1% to a low of .50% minus the merciless government tax of no less than 20%. Thus it is that the 1% interest rate only becomes .80% and the .50% merely amounts to .40%. Subtract therefrom 3.2%. Result: Pepe and Pilar lost. The government and the banks both gained. The former has the mandatory tax. The later have the balance from the high interest rates when they lent money of the poor unwary Pepe and Pilar.
But what about time deposits? It’s the same. Depositors also lose—less but they still suffer loses. With the minimum time deposit ranging form Phil. Pesos 5,000.00 to 10,000.00 the interest rates vary from 1.5% to 2.125% for a long 90 day deposit. Subtract the inescapable 20% tax and subtract further the inflation rate of 3.2%. And the balance becomes “Never mind!”
This is how great the economy is according to the Malacañang occupant with a Doctorate Degree in Economics from a prestigious foreign University. This is how prosperous the Country is as repeatedly echoed by its faithful followers. This is how blessed Filipinos are even if they do not know it, even if they have less to eat and to wear. That is why the same personality could charter a plane, take along many loyal supporters, join the royalties in Spain and England. Who could really blame the Manila Pen episode, the Sumilao farmers’ march, the on going angry rallies and resentful marches?
December 19, 2007