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Consumers spend almost every dollar as soon as they get it. The ones hoarding capital are the banks. The fed can never seem to get interest rates low enough to

Consumers spend almost every dollar as soon as they get it. The ones hoarding capital are the banks. The fed can never seem to get interest rates low enough to get the banks to loan to businesses. So why do big banks get to keep the money the fed prints instead of the government, thereby lowering taxes and increasing consumer spending? Because then banks wouldn't get unlimited cheap capital and wouldnt be able to continue the leveraged buyout of American industry. Entrepreneurs would control the economy like they used to instead of financiers, and we cant have that now can we?

notahacker 6y ago
> The ones hoarding capital are the banks...get to keep the money the fed prints instead of the government Banks lend more dollars than they borrow from the Fed (or depositors). They don't 'get to keep' money they borrow from the Fed, they repay it at the base interest rate.
- sthnblllII 6y ago
  They spend it before the inflationary effect occurs, so yes, it is a transfer of wealth from holders of dollars to banks. The hoarding obviously isn't in cash, just look at their financial reports to know what they do with the money, and it largely isn't lending to businesses for expanding production. Since deregulation, much of the new money has gone to buying stocks. Not exactly helping the economy. As long as the stock market appreciates faster than the prime rate, it makes sense to borrow money from the fed to buy stocks. Especially if the fed is buying stocks too, keeping the market in perpetual inflation driven growth.
gamblor956 6y ago
Banks are not allowed to hoard capital, and financially speaking, keeping cash in reserve means they're not making money from it. Indeed, the regulations require the opposite of what you suggest: banks are are required to maintain a certain level of capital reserves to avoid collapse even though they would prefer to spend all of it on investments or making loans.

notahacker 6y ago

> The ones hoarding capital are the banks...get to keep the money the fed prints instead of the government Banks lend more dollars than they borrow from the Fed (or depositors). They don't 'get to keep' money they borrow from the Fed, they repay it at the base interest rate.

sthnblllII 6y ago
They spend it before the inflationary effect occurs, so yes, it is a transfer of wealth from holders of dollars to banks. The hoarding obviously isn't in cash, just look at their financial reports to know what they do with the money, and it largely isn't lending to businesses for expanding production. Since deregulation, much of the new money has gone to buying stocks. Not exactly helping the economy. As long as the stock market appreciates faster than the prime rate, it makes sense to borrow money from the fed to buy stocks. Especially if the fed is buying stocks too, keeping the market in perpetual inflation driven growth.

gamblor956 6y ago

Banks are not allowed to hoard capital, and financially speaking, keeping cash in reserve means they're not making money from it. Indeed, the regulations require the opposite of what you suggest: banks are are required to maintain a certain level of capital reserves to avoid collapse even though they would prefer to spend all of it on investments or making loans.