Tuesday, December 29, 2009
Whaaat?? Keep money out of the economy?
by Larry Geller
You might have noticed this tiny article at the very bottom left of the Advertiser’s business page (B5):
The Federal Reserve on Monday proposed allowing banks to set up the equivalent of certificates of deposit at the central bank, a move that would help the Fed mop up money pumped into the economy and prevent inflation from taking off later.
Under the proposal, the Fed would offer so-called "term deposits" that would pay interest. Doing so would provide banks with another incentive to park their money at the Fed, rather than having it flow back into the economy. [Salt Lake Tribune, Fed exit strategy: Let banks set up CDs, 12/28/2009]
What about making these banks flow money into the economy by making loans to small businesses and individuals and re-structuring mortgages? What will Federal Reserve Chairman Ben Bernanke do for these banksters next, provide them with free foot massages and birthday cakes? They don’t need "certificates of deposit.”
Needless to say, there’s more to the story. The Advertiser probably had a puka to fill so they eviscerated a longer story and left us hanging about why this would be proposed. The link above takes you to a more complete version. It’s not too much better, but it explains that this is a mechanism to forestall “inflation.” I put the word in quotes because to the Fed it means “wage inflation,” which they control so that workers never get to share in the profits.
Right now interest rates to the banks are close to zero. They are getting free money. Then they turn around and charge credit card holders usurious rates, even around 30%. And they continue to foreclose on houses, reselling many at a profit, of course.
No, the full article isn’t any more comforting. Check out this snippet:
The Fed's balance sheet has ballooned to $2.2 trillion, reflecting the creation of lending programs intended to ease the financial crisis. That's more than double the pre-crisis level.
So where’s the money, Bernanke? How about it, Obama? We could all do with a little trickle-down just about now.
it was only a matter of time that the Fed began offering CDs after it began its Totally Free Checking special earlier this year.
Move Your Money From Your Giant Bank to a Community Bank.
Check out youtube: "Move Your Money"
Too big to fail huh?
Great minds think alike. I'm working on a "Move Your Money" article after receiving the link from Viviane Lerner via email. It should be up later.
Post a Comment
Requiring those Captcha codes at least temporarily, in the hopes that it quells the flood of comment spam I've been receiving.