Fed Policy of Holding Rates Near Zero Subsidizes Large Banks, Hoenig Says

Fed Policy of Holding Rates Near Zero Subsidizes Large Banks, Hoenig Says

www.bloomberg.com

The U.S. central bank’s policy of holding interest rates near zero is a subsidy for large banks and redistributes wealth from savers to debtors, said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City.

Banks can borrow at 0.25 percent and buy Treasury bonds that yield 3 percent, keeping the difference. “It provides them a means to generate earnings and restore capital, but it also reflects a subsidy to their operations.”

(visit the link for the full news article)

This definitely does not come as a surprise, knowing that the people behind the Federal Reserve are the very same people that control the banking cartels who solely seek to satisfy their own interests. However, I am in total disbelief to see this unfolding right in front of us, without any American politician bringing an end to this. Oh, I forgot that politicians are corporate puppets, doing exactly as told in exchange for fat bribes.

Where does this stop? Surely, they cannot seek the destruction of their own country.

www.bloomberg.com
(visit the link for the full news article)

reply to post by Mdv2


This should be a surprise to no one.
It's rather funny most, if not all, of the growth in our economy is just funny math, moving money around and playing with interest rates.there is no real actual physical growth happening, Its all manipulation of imaginary numbers on a computer.

Keeping interest rates near zero also helps the U.S govt. The U.S govt can't afford to let interest rates rise. Raising interest rates would crash the economy, they don't want to take the depression now, instead they want to drag out the recession, praying that a recovery happens.

A recovery won't happen though, since the malinvestments aren't being allowed to be liquidated things will only get worse. The U.S is the most productive economy in the world and the U.S govt doesn't seem to like that, in fact in 08 the U.S govt had great opportunity to do something about this and they refused. That shows you where the real crooks reside.

Why do they insist on using the words 'growth' why does an economy always need to grow? why can't an economy just simply be sustained. (oh yeah I forgot about big business and the banks)

There is so much talk about having to grow the economy, that everyone is focused on growth. However 'growth' only pleases those at the top, the likes of me and you will still be on the bottom rung fighting for survival. IMHO - anyone that thinks a growing economy is the only way forward need to check the figures and take a hard look at the current system and see it for themselves.

Smoke and mirrors and monopoly money.

I work in banking but for a small community bank. We receive no assistance from the Fed what-so-ever.

The Fed recently told us that we are required to stop charging overdraft fees to our customers who overdraw their account. They don't want community banks making money on over draft fees. So our alternative (as suggested by the Fed), is to send the customer a warning notice for the first over-draft, a phone call with free money management counseling for the second over draft, and if you have a third over draft your account will be closed and you can no longer bank here. So with this guideline in place we are basically forced to push the customer over to the big bank.

reply to post by franspeakfree


It's simple, our economy needs to grow to pay for the interest owed to the federal reserve. As long as the economy grows, they can hide/mitigate the effects of our corrupt central banking system. But the minute our economy starts to shrinks, it gets bad, because in a sense we are falling behind on our ability to pay these banks the interest. The funny thing is, on a finite planet, our economies have to stop growing eventually, which means this issue is inevitable because we can't grow forever.

A shrinking GDP means less tax revenue, means less debt being payed off, means more debt owed through interest.

Originally posted by VonDoomen
The funny thing is, on a finite planet, our economies have to stop growing eventually, which means this issue is inevitable because we can't grow forever.

Which is the point I was getting at people really need to look in to just how this world works, if we got rid of the cartels and big business we simply would not have to grow, we could simply exist in a sustained economy. (we can all dream eh)

They say money makes the world go round, but in truth its not the money per se its the BANKS and the Cartels behind them.

reply to post by VonDoomen


You are so right, interest is the key.

Before Countrywide folded and became B of A (a.k.a. the evil empire), I had a HELOC and decided I did not want to pay 30 days worth of interest per month on the loan. So, simple solution, I used a credit card for every one of my monthly purchases and meanwhile I deposited my weekly paycheck back to the HELOC. At the end of the month I'd use a check from my HELOC to pay off the credit card. So since I was paying my card in full every month I avoided the interest there and since Countrywide got four times their montly payment, and got paid every week, they never had the chance to charge 30 days worth of interest there either.

Wouldn't you know it.. I get a call from Countrywide telling me that they would no longer accept multiple payments, that I could ONLY pay them once per month. After investigating the account I found out that each of my weekly payments were being held until the end of the month, which is illegal. So a good lawyer friend of mine contacted Countrywide and yeah, I got the interest back retro-actively, which I deposited right back into the HELOC haha.

But just goes to show you they will take any measure to get their interest. Same with credit cards, you pay it off or stop using it and they cancel your account due to inactivity.

Originally posted by franspeakfree
Why do they insist on using the words 'growth' why does an economy always need to grow? why can't an economy just simply be sustained. (oh yeah I forgot about big business and the banks)

There is so much talk about having to grow the economy, that everyone is focused on growth. However 'growth' only pleases those at the top, the likes of me and you will still be on the bottom rung fighting for survival. IMHO - anyone that thinks a growing economy is the only way forward need to check the figures and take a hard look at the current system and see it for themselves.

Because our money system guarantees zero growth in real wealth. Every dollar comes from debt, either created by the fed or by the banks. Any increase in national wealth, by definition in our money system, must come from more debt or inflation. Thus in order to gain more individual wealth you must cause others to go into debt or take some percentage of another's wealth.

Makes the politics in Washington unbearable. All they talk about is cuts and taxes, without ever addressing the real issue behind our recurring economic problems. The money system itself.

reply to post by franspeakfree

Why do they insist on using the words 'growth' why does an economy always need to grow? why can't an economy just simply be sustained. (oh yeah I forgot about big business and the banks)

Unless you view high unemployment, stagnation and poverty as good things, it makes no sense to not want to see our economy grow.

There is so much talk about having to grow the economy, that everyone is focused on growth. However 'growth' only pleases those at the top, the likes of me and you will still be on the bottom rung fighting for survival.

When our economy contracted 60% of the job loss was within the small business sector, to say that economic growth only benefits ``the top`` is absurd. Economic stagnation only benefits the currently wealthy, economic growth benefits everyone.