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The bailouts represent money printed and deposited in the accounts of banks. Kind of a fusion of the worst of right and left ideology: devalue everyone else so

by temphn 14y ago

The bailouts represent money printed and deposited in the accounts of banks. Kind of a fusion of the worst of right and left ideology: devalue everyone else so that the richest get richer. The full magnitude of the money printing is actually much greater than the public has been led to believe, and came out quietly in late 2010. http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm http://money.cnn.com/2010/12/01/news/economy/fed_reserve_dat... The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday. ... The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed -- an annual rate of between 0.5% to 3.5%. ... Sen. Bernie Sanders, the Vermont independent who had authored the provision of the financial reform law that required Wednesday's disclosure, called the data that was released incredible and jaw-dropping. "The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.

argonaut 14y ago
Your arguments seriously ignore and misstate what the Federal Reserve actually does. 1. The Fed/govt does not simply deposit money "in the accounts of banks." Under TARP and quantitative easing, the Treasury purchased securities or shares from the banks. Under quantitative easing, the Fed purchased Treasury securities and mortgage-backed securities from the banks. Yes, the Fed printed the money to buy those securities, but it't not like they just printed the money and gave the banks free money. 2. Overnight loans are almost irrelevant to your point because they're overnight. They have to be paid back within 24 hours. The $9 trillion dollar figure sounds impressive but that's just the value of all the overnight loans added up. If you make $8.2 billion in loans every day for 3 years (with the 8.2 billion paid back the next day and then another 8.2 billion loaned out again), you get $9 trillion.
- temphn 14y ago
  Yes, the Fed printed the money to buy those securities, but it's not like they just printed the money and gave the banks free money. That is exactly what they did, because otherwise those securities would not have had the same price on an open market. The Fed paid for worthless holdings and propped up banks by printing trillions, thereby devaluing everyone else's dollars. And they are still doing it, now printing $85B per month ($1T/year) to buy mortgage-backed securities and reinflate the housing bubble. Printing $100 to buy $1 of MBS toxic waste from the banks is direct depositing $99 into their pockets (and causing commensurate dilution of all other dollar holders). Overnight loans are almost irrelevant to your point because they're overnight. Without printing $9 trillion to "inject liquidity" the banks would have gone bust when the capital call came. It was this overnight loan that allowed the banks to socialize the losses while privatizing the gains.

by temphn 14y ago

argonaut 14y ago

Your arguments seriously ignore and misstate what the Federal Reserve actually does. 1. The Fed/govt does not simply deposit money "in the accounts of banks." Under TARP and quantitative easing, the Treasury purchased securities or shares from the banks. Under quantitative easing, the Fed purchased Treasury securities and mortgage-backed securities from the banks. Yes, the Fed printed the money to buy those securities, but it't not like they just printed the money and gave the banks free money. 2. Overnight loans are almost irrelevant to your point because they're overnight. They have to be paid back within 24 hours. The $9 trillion dollar figure sounds impressive but that's just the value of all the overnight loans added up. If you make $8.2 billion in loans every day for 3 years (with the 8.2 billion paid back the next day and then another 8.2 billion loaned out again), you get $9 trillion.

temphn 14y ago
Yes, the Fed printed the money to buy those securities, but it's not like they just printed the money and gave the banks free money. That is exactly what they did, because otherwise those securities would not have had the same price on an open market. The Fed paid for worthless holdings and propped up banks by printing trillions, thereby devaluing everyone else's dollars. And they are still doing it, now printing $85B per month ($1T/year) to buy mortgage-backed securities and reinflate the housing bubble. Printing $100 to buy $1 of MBS toxic waste from the banks is direct depositing $99 into their pockets (and causing commensurate dilution of all other dollar holders). Overnight loans are almost irrelevant to your point because they're overnight. Without printing $9 trillion to "inject liquidity" the banks would have gone bust when the capital call came. It was this overnight loan that allowed the banks to socialize the losses while privatizing the gains.