Posted on 08/17/2011 9:41:29 AM PDT by SeekAndFind
One of the most outrageous "open secrets" of U.S. government policy these days is that the Federal Reserve is still paying big banks not to lend money.
And it's doing that while screwing average Americans who have been responsible and lived within their means.
Huh?
Seriously:
The Federal Reserve is quietly continuing with one of the many outrageous bank-bailout programs it initiated during the financial crisis--the one in which it pays big banks interest on their "excess reserves."
What are "excess reserves"?
Money that the banks have but aren't lending out--money that banks are just keeping on deposit at the Fed.
The Fed is paying banks 0.25% interest on this money.
0.25% interest may not sound like much, but it's more than the banks are paying you to keep money in your savings or money-market account. It's also more than you'll earn if you lend the Federal government money for 2 years.
Oh, by the way, why, exactly, are you earning so little interest in your savings accounts and money-market funds?
Well, because, thanks to another one of its bank-bailout programs, the Fed is keeping short-term interest rates at zero.
In other words, the Fed is paying banks not to lend money and screwing you, American citizens, because you're dumb enough to have saved money.
This is just so bass-ackwards it's not to be believed.
Why on earth is the Fed paying banks not to lend? Well, back in the financial crisis, the Fed wanted to find ways to secretly bail out the banks without it being screamingly obvious to every American that that was what it was doing.
(Excerpt) Read more at businessinsider.com ...
Rick Perry’s description of Helicopter Ben’s mismanagement of our currency as “almost treasonous” was inappropriate. He should have omitted the word “almost.”
Let’s be clear — America DOES NOT give capital punishment to anyone convicted of treason, or fighting for the enemy.
Exhibit A -— John Walker Lindh — the American Taliban.
BTW, The money is given to banks so that they can buy treasury bonds and make money off the arbitrage.
Yep...it’s the way the fed has monetized their debt.
Yes. From my favorite blog:
The Federal Reserve has done nothing for the past 3 years except subsidize a risk free bond trade for banks -- a transfer, if you will, of presumed future tax revenues from Treasury, Federal to treasuries, bank. Said treasuries are sitting on nearly 2 trillion dollars, some portion of which is attributable to the Fed's reaching into the pockets of children yet unborn. "A dollar today is worth more than a dollar a year from now" in an inflationary environment, and this apparently is part of the calculus that rationalizes this trade.As notable for its audacity as it is, this feat has done nothing to stabilize prices, support or strengthen the value of the dollar, reduce unemployment or cause GDP growth; nothing to restore confidence in our markets either at home or abroad; nothing to overcome the blatantly anti-business bias of the administration -- nor was it meant to, nor would anyone expect it to. It was designed to keep corporations -- especially a few key banks -- from failing, on the pretext that they are "too big to", because they are the world's financial system.
How would they get the money back? Is it spelled out in some disclosure that they can do this? Can they foreclose on a borrower that’s never missed a payment? I’d like to see that portion of the law if you can point me to it.
Thanks,
SJB
The plain fact is that the government has suspended standard accounting rules. Most banks and insurance companies are according to pre 2008 rules insolvent. How much commercial, retail and residential real estate is sitting idle? How much is being carried on the books at pre 2008 values instead at 2011 values?
The fed is playing this game of slowly re inflating the tires on the financial institution while hoping that the patches don’t blow or another puncture occurs.
You know what? I’m tired of sitting on the sidelines.
I’m gonna be part of the action and stop paying my bills. Stop paying the mortgage, the Credit Card bills, the utilities, the car payments, the...well, that’s all I got, but I’m gonna stop and reap the benefits of my government’s largesse.
Why have I been so good for so long? I’m not getting anything out of it...
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