Haven't the banks from TARP until now had the opportunity to make more money passing money back and forth to the government than lending to the public? Isn't that beginning to change? That would break the inflation dam as well , maybe? Sorry, that's what happens when you put ". " instead of ">"
Yes, the big banks have no doubt made billions on a positive carry trade (borrow at short term rates, lend at higher long term rates) in the last two years. They love a gently rising yield curve and the longer it persists, the more they make.
And Geitner and Bernanke are no doubt aware that the QE’s are helping the big banks get healthy again. What I think they’ve been hoping though is that they could put enough downward pressure on longer interest rates to get markets like housing going again. It just didn’t work out like they hoped it would.
In the meantime, individuals living on the interest income of their investments (and there are a whole bunch of those) have been spending their capital for the past four to five years instead, because they’re earning less than peanuts on their CD’s, etc. That is the real reason the small banks are shrinking. People are spending their deposits on food and lodging instead of spending the interest they used to earn.
I heard an elderly person ask quite innocently the other day, “Do you suppose Obama just doesn’t like old people?”
Even leaving aside the implications of ObamaCare, which many older people have yet to realize is a near certain sentence of an earlier death for them, many seniors are starting to wonder about the answer to that same question.
Being forced to spend one’s lifelong accumulation of capital at an unexpectedly fast pace is disturbing far more seniors than Obama imagines. This is a very under-reported issue because the MSM isn’t going to go there, and it’s a bit too boring for Fox and talk radio. And now prices are starting to rise rapidly as well, but Soc. Sec. payments didn’t go up (went down actually) because the government sees no inflation. I suspect Obama is slowly losing many of his senior supporters as a result.