This seems to be thoroughly conflating two things: > We’ll start with this story on Fed Chair Jay Powell’s choice to transfer $1.1 trillion to large financial

This seems to be thoroughly conflating two things: > We’ll start with this story on Fed Chair Jay Powell’s choice to transfer $1.1 trillion to large financial institutions over the past two and a half years when he helped raise interest rates, which is about $3000 from every single American. > How did this transfer happen? “Lenders got higher yields for their deposits at the Fed but kept rates lower for many savers,” wrote the FT, with subsidies higher for big banks than small ones. The issues are: 1. The Fed sets an interest rate target. This has everything to do with controlling macroeconomic parameters and, unless there is some pretty serious corruption involved, should not give much if any consideration to the banks’ profitability. 2. Banks get away with paying approximately zero interest to most customers, and, critically, this rate does not scale properly with the rates set by the Fed. As a result of #2, bank profits have a bizarre dependence on interest rates beyond all the quite reasonable ways that their profits should depend on rates. Arguably #2 should be fixed, but #2 being true does not mean that the Fed should keep interest rates low just to keep bank profits low. (Note that bank profits are a very complicated function of rates due to large bank exposures to fixed income.)