My brother-in-law moved most of his money into a money market fund two years ago. He still calls it the smartest thing he ever did. He may be right, and he is also standing still.
The Fed met at the end of July and left its rate alone. Three and a half to three and three-quarters percent. That was the fifth meeting in a row with no move.
That one rate sets what your cash gets paid. The money market fund. The savings account. The six-month certificate at the branch. When the committee sits, they all sit with it.
Now set the other number beside it. Consumer prices rose 3.5% in the year through June. Inflation has run above the Fed’s own 2% goal for more than five years.
3.75%
The top of the Fed’s target range, unchanged since January, and roughly the ceiling on what safe cash pays
3.5%
Consumer prices over the year through June
A quarter of a percentage point between the two. That is the whole reward for playing it safe this year, and the tax bill comes out of it.
Interest is taxed as ordinary income, the same as a paycheck. In most brackets that quarter point disappears on the return. Call it a wash.
And the pile keeps growing. Money market funds held $7.93 trillion in the third week of August, an all-time high. Households own $3.11 trillion of that directly.
A lot of that is this cohort’s money. Proceeds from a house that sold. A rollover from a retirement account. The cash you moved when the market got loud. Money waiting on a decision.
The assumption nearly everyone carries into a year like this is that the next move is down. The July minutes point the other way.
Three of the twelve votes went against the hold. All three wanted a quarter-point increase. First time since 2016 that three dissents lined up the same way.
The committee’s own June projections put the rate between 3.6% and 4.1% at the end of this year. Three months earlier that band was 3.25% to 3.75%. The picture moved up.
Where the cohort’s money sits this quarter, and which aisle the cash pile is really funding.
Cash is not a mistake and I am not going to tell you it is. If you need the money inside two years, the boring account is the right answer and the real return hardly matters.
And this one cuts both ways. If the three hawks on that committee eventually win the room, savers get paid more. That is the honest reading, and it is why tomorrow morning matters.
The arithmetic
Policy rate: Federal Reserve, FOMC statement and implementation note of July 29, 2026. The target range holds at 3-1/2 to 3-3/4 percent, a fifth consecutive meeting without a change, on a 9 to 3 vote; the three dissenting votes, all regional Reserve Bank presidents, preferred a quarter-point increase. Chairman Kevin Warsh speaks at the Jackson Hole symposium this week; the next scheduled decision is September 15 and 16. The prior instance of three same-direction dissents was September 2016. Projections: the FOMC’s June 2026 Summary of Economic Projections puts most officials’ year-end 2026 rate between 3.6% and 4.1%, up from a 3.25% to 3.75% band in the prior release. Prices: consumer prices up 3.5% over the year through June 2026, still above the Committee’s 2% goal, which it has exceeded for more than five years. Cash: Investment Company Institute, Money Market Fund Assets release of August 20, 2026, total assets $7.93 trillion for the week ended August 19, of which retail funds hold $3.11 trillion. The quarter-point gap between the top of the range and the June inflation rate is Boomers Trade’s own subtraction, and it is a rough read rather than a yield on any particular account. Interest income is taxed as ordinary income under longstanding federal rules.
The thing to watch is not the speech. It is the vote in September, and whether three dissents become four. My brother-in-law will keep calling his fund the smartest thing he ever did. It pays him exactly what it paid him in January, and the grocery store has not offered him the same deal.
Andrew
Boomers Trade is written by someone getting older right alongside you, and watching who profits from it.
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