$26 Trillion From Fed To Banks Who Profit More
|August 21, 2012||Posted by Jeffery J. Smith under News|
How About Quantitative Easing For the People?
What banks get away with! As forever they will, as long as society lets them corral much of our spending for land. We trim, blend, and append three 2012 articles from (1) Op-Ed News, Aug 5, on the Fed by R. Clark; (2) NY Times Deal Book, Aug 9, by P. Eavis; and (3) Reuters, Aug 3, easing for people by A. Kaletsky.
by Richard Clark, by Peter Eavis, and by Anatole Kaletsky
$26 Trillion of Bankster Fraud & Theft
Thanks to Congressman Ron Paul, former Congressman Alan Grayson, and Congressman Bernie Sanders, we have an audit of the Federal Reserve.
We now know that the Federal Reserve secretly created $26 trillion (out of thin air), without US government approval. This adds up to nearly a quarter million dollars per American household.
The total lending for the Fed’s “broad-based emergency programs” was $16.1trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch, and Bank of America, received more than a trillion dollars each!
The GDP of the United States is $14.1 trillion. The entire national debt of the United States government is $14.5 trillion. The budget that is being debated in Congress and the Senate is “only” $3.5 trillion.
Fifteen trillion dollars is a stack of hundred-dollar bills that is longer and wider than a football field and over 2/3rds the height of the Statue of Liberty. If you add another $11 Trillion to get our total of $26 Trillion, that same stack, covering an entire football field, will now be taller than the Statue of Liberty.
These currency swaps and the “broad-based emergency program” loans, together totaled more than $26 trillion. That’s almost $100,000 for every man, woman, and child in America or nearly a quarter million dollars per household — $226,430 to be exact.
Many of the people who serve as directors of the 12 Federal Reserve Banks come from the exact same financial institutions that received emergency loans. For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.
While greatly enriching senior bank officers and corporate CEOs, this bailout also provided them with hundreds of billions of additional dollars with which to gamble in the derivatives market.
The Federal Reserve likes to refer to these secret bailouts as an all-inclusive “loan program,” but virtually none of the money has been returned — and it was loaned out at 0% interest. This was, therefore, a gift — as well as a form of theft, from the American people.
JJS: Do we really want to let central banks or central governments control the creation of new money? If locals could legally do it, too, then there’d be competition. And that should keep all the lenders honest, or the dishonest ones would lose customers to the honest ones (for whom we’re still waiting).
With Rates Low, Banks Increase Mortgage Profit
Interest rates on mortgages and refinancing are at record lows, but the bigger winners are the banks making the loans.
Banks are taking profits far higher than the historical norm. That 3.55 percent rate for a 30-year mortgage could be closer to 3.05 percent if banks were satisfied with the profit margins of just a few years ago. The lower rate would save a borrower about $30,000 in interest payments over the life of a $300,000 mortgage.
The jump in revenue for the banks is not coming from charging consumers higher fees. Instead, it comes from taking the mortgages and bundling them into bonds that they then sell to investors, like pensions and mutual funds. The higher the mortgage rate paid by homeowners and the lower the interest paid on the bonds — a difference known in the industry as the spread — the bigger the profit for the bank.
Mortgage lenders may also be benefiting from less competition. Since the bailouts of 2008 a few big banks, primarily Wells Fargo, JPMorgan Chase, Bank of America, and U.S. Bancorp, have concentrated mortgage lending in their hands.
Mortgage analysts who track this difference say it has been historically high in recent months. They contend that if the market were functioning properly, the recent drop in the bond rates should have led to a larger decline in mortgage rates for consumers than has actually occurred.
JJS: Rather than take power from the elite, some propose giving more crumbs to everyone.
How About Quantitative Easing For the People?
The Fed and the BoE have been creating new money and spending it on government bonds, in the policy known as “Quantitative Easing”. Giving away free money may sound too good to be true or wildly irresponsible, but it is exactly what the Fed and the BoE have been doing for bond traders and bankers since 2009. Directing QE to the general public would not only be much fairer but also more effective.
Suppose the new money created since 2009, instead of propping up bond prices, had simply been added to the bank accounts of all U.S. and British households. In the U.S., $2 trillion of QE could have financed a cash windfall of $6,500 for every man, woman and child, or $26,000 for a family of four. Britain’s QE of £375 billion is worth £6,000 per head or £24,000 per family.
Distributing money to the general public was the one response to intractable recessions and liquidity traps that united Milton Friedman and John Maynard Keynes. Their main difference was that Friedman proposed dropping dollar bills out of helicopters, while Keynes suggested burying pound notes in chests that unemployed workers could dig up.
JJS: While it’s probably fairer to give newly “minted” money to the public instead of to the elite, it’s not necessary. Perhaps because their salaries come from public treasuries, many economists do not mind letting central authorities print new money out of thin air, however much the risk of inflation. Yet fresh new notes are not needed to get cash to the people — there’s always the “rent”.
People spend trillions each year for land and natural resources. Presently that flow of spending goes into very few pockets, and those are not the pockets of people who created land or resources, since none of us did. And irony upon irony, it is all of us who, by our demand, make those sites and resources valuable.
Since we need Earth to live, we all have a right to some Earth. Since we all create Earth’s economic value, we have a right to a share. And if we got that share, then the banks and Wall Street wouldn’t. Mortgages would shrink, banks would lose their power, the Fed could wither away, and finances could become as simple as basic arithmetic — which would certainly suit me.
Fed balance sheet hits another record size as …