The Government Is Still Paying Banks Not To Lend
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  1. #1
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    The Government Is Still Paying Banks Not To Lend

    yep.... luuuuurvely.

    The Federal Reserve is quietly continuing with one of the many outrageous bank-bailout programs it initiated during the financial crisis--the one in which it pays big banks interest on their "excess reserves."

    OUTRAGE OF THE DAY: Do You Realize That The Government Is Still Paying Banks Not To Lend...?
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  2. #2
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    Quote Originally Posted by Creakyknees View Post
    yep.... luuuuurvely.

    The Federal Reserve is quietly continuing with one of the many outrageous bank-bailout programs it initiated during the financial crisis--the one in which it pays big banks interest on their "excess reserves."

    OUTRAGE OF THE DAY: Do You Realize That The Government Is Still Paying Banks Not To Lend...?
    You do realize that the Federal Reserve IS NOT the government, right? The Federal Reserve has minimal government oversight. Its members ARE the banks.

    Once more, the Federal Reserve is neither federal, nor is it a reserve.

  3. #3
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    Quote Originally Posted by DiegoMontoya View Post
    You do realize that the Federal Reserve IS NOT the government, right? The Federal Reserve has minimal government oversight. Its members ARE the banks.

    Once more, the Federal Reserve is neither federal, nor is it a reserve.
    You are not seriously making that argument, are you?

    "According to the Board of Governors, the Federal Reserve is independent within government in that "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.[12][13][14][15] The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury.[16]"

    - wiki
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  4. #4
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    and

    Is this like paying farmers not to plant?

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    Quote Originally Posted by Creakyknees View Post
    You are not seriously making that argument, are you?

    "According to the Board of Governors, the Federal Reserve is independent within government in that "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.[12][13][14][15] The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury.[16]"

    - wiki
    Yeah, I am making that argument. I'm also making the argument that you do not quite understand how the Fed works, and linking to Wikipedia isn't helping that.

    Once again, the Federal Reserve members ARE the banks. Look, I don't care about winning some silly argument with you. Not one bit. What I do care about is that people understand how the Federal Reserve works and why it has such a huge impact in our lives. Your post talked about the "government" when it was actually the Federal Reserve's actions that are the topic. I am hoping that you understand the difference. That is all.

    As your link said, the Fed's actions DO NOT HAVE TO BE RATIFIED by anyone in the US Government. So, when it takes the decision you noted in your post, how exactly is it accurate to equate that with the government? Seriously now.

  6. #6
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    Quote Originally Posted by DiegoMontoya View Post
    You do realize that the Federal Reserve IS NOT the government, right? The Federal Reserve has minimal government oversight. Its members ARE the banks.

    Once more, the Federal Reserve is neither federal, nor is it a reserve.
    yep, it's a privately owned bank. but, it does have the power to counterfeit money, which is better than being able to stuff teh ballot box
    Whenever the legislators endeavour to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people who are thereupon absolved from any further obedience, and are left to the common refuge which God hath provided for all men against force and violence - John Locke

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  7. #7
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    Funny, I have been able to borrow all the money I have wanted to lately. In the past year I have borrowed to buy a 2 cars and investment properties. In fact I have been offered more than I need. I get credit card offers in the mail at least 3 times a week.

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    Quote Originally Posted by Dave IV View Post
    Funny, I have been able to borrow all the money I have wanted to lately. In the past year I have borrowed to buy a 2 cars and investment properties. In fact I have been offered more than I need. I get credit card offers in the mail at least 3 times a week.
    Well.. you're unique then. Everyone else cant get credit.

  9. #9
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    I own farm land

    Quote Originally Posted by Fixed View Post
    Is this like paying farmers not to plant?
    and the Gov't does pay not to plant - hell of a deal

  10. #10
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    Agreed.

    Quote Originally Posted by Dave IV View Post
    Funny, I have been able to borrow all the money I have wanted to lately. In the past year I have borrowed to buy a 2 cars and investment properties. In fact I have been offered more than I need. I get credit card offers in the mail at least 3 times a week.

    I get solicitations about once a month from my bank saying I can get a mortgage worth 125 percent of the value of my home. Hell that's what got the housing market in the trouble it's in now. Guess ya just need a good credit score.

  11. #11
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    Quote Originally Posted by jarbiker View Post
    IGuess ya just need a good credit score.
    That may be true. The banks bent over backwards to give me the last two mortgage loans I wanted. Both of them for investment properties within the last year.

  12. #12
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    Paying on excess reserves is a new policy that Bernanke put in about 2 years ago. One of the few things he has done that I disagree with so far, messes up the incentives for the banks.

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    Quote Originally Posted by Fixed View Post
    Is this like paying farmers not to plant?
    It would be like that IF people were starving and farmers were getting paid not to plant crops. Wait until a loaf of bread hits $10 and farmers are still being paid not to plant or bread just isn't available on the supermarket shelves. Then, it will be the same thing.

    Right now, people cannot get loans and the banks aren't lending because they are getting a risk free return by taking the 0% money from the Fed and investing it in US Treasuries. I should start my own freaking bank so I can partake in this ridiculous scheme.

    It really seems like the Fed is looking out for big business and not the small guys, which are you and me. Don't know how they are going to get consumer spending back on track by doing this. Maybe they have no clue either.
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  14. #14
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    Quote Originally Posted by DiegoMontoya View Post
    Yeah, I am making that argument. I'm also making the argument that you do not quite understand how the Fed works, and linking to Wikipedia isn't helping that.

    Once again, the Federal Reserve members ARE the banks. Look, I don't care about winning some silly argument with you. Not one bit. What I do care about is that people understand how the Federal Reserve works and why it has such a huge impact in our lives. Your post talked about the "government" when it was actually the Federal Reserve's actions that are the topic. I am hoping that you understand the difference. That is all.

    As your link said, the Fed's actions DO NOT HAVE TO BE RATIFIED by anyone in the US Government. So, when it takes the decision you noted in your post, how exactly is it accurate to equate that with the government? Seriously now.
    So, elighten us. Can Bernanke be replaced, and if so, how? What about the other chairs? Can they be replaced? Who controls these guys and has the power to replace them, assuming they can be replaced?

    I just went to the Wiki page for the Federal Reserve and there is a ton of information there. Seems as though the Fed is supposed to act in the interest of both the government and private banks. Well, it has the private banks issue covered. Now, how about the interests of government which I would think would be to reduce unemployment and increase GDP.
    “Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.” Modified by unknown from Bovard's original quote<o:p></o:p>

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  15. #15
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    Quote Originally Posted by Dave IV View Post
    Funny, I have been able to borrow all the money I have wanted to lately. In the past year I have borrowed to buy a 2 cars and investment properties. In fact I have been offered more than I need. I get credit card offers in the mail at least 3 times a week.
    Yeah, we get credit card offers in the mail too. In fact, my wife got a credit card last month with a 0% intro rate for 15 months. Me, I just got one this week with a 0% interest rate for 21 months. We also got a $12,000 loan for our Focus about this time last year.

    However, when it comes to refinancing our mortgage, that has not been easy. We refinanced our townhouse last year about this time, but it was like pulling teeth and our credit scores are in the 780s and we had 20% equity in the townhouse. Getting the loan on our new house back in February was pretty easy, but refinancing it last month wasn't easy. In fact, I don't even know if I want to try and refinance it again to save 1/2% on our mortgage. That is how much of a headache it has been. Might wait to see how bad the economy gets and see if the 30 year mortgage rate actually gets to 3.5%. Today, it was at 3.875%. When we were refinancing last month, a client and I joked that if mortgage rates got down to 3.5%, money wouldn't matter anymore and the new currency would be bullets.

    The problem isn't with those of us with stellar credit ratings. It is the rest of the people that need the credit to get this freaking economy going again. If people actually have to spend within their means and not use credit, this recovery will take forever, if it happens at all. Of course, what I am advocating isn't the most prudent thing in the world. Everybody should spend within their means. However, what they are doing is trying to stop a credit junky economy cold turkey. How has it worked out over the past 3 years?
    “Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.” Modified by unknown from Bovard's original quote<o:p></o:p>

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    Quote Originally Posted by fabsroman View Post
    So, elighten us. Can Bernanke be replaced, and if so, how? What about the other chairs? Can they be replaced? Who controls these guys and has the power to replace them, assuming they can be replaced?

    I just went to the Wiki page for the Federal Reserve and there is a ton of information there. Seems as though the Fed is supposed to act in the interest of both the government and private banks. Well, it has the private banks issue covered. Now, how about the interests of government which I would think would be to reduce unemployment and increase GDP.
    Well, they serve 14 year terms, I believe, so they can be replaced when their term ends. Who controls them? The banks. As I noted previously, the actions of the Fed do not have to be ratified by anyone in the US government. The banks run the country. You can lie to yourself and say, no, we're free. But you're not. You just can't see the walls of the aquarium.

    So, you see, I'm not exactly sure why people think we can "pay off" the national debt. We can't. There's not enough money. Even if there were enough money, if the government collected it all and paid off the debt, the economy would collapse. Why? Because there wouldn't be any more money to for buying and selling to exist. That's what I meant previously when I said our debt IS our money supply.

    It's just how the system works. Our government borrows from the Federal Reserve. They give us money and we give them Treasury bonds. That money you have in your wallet? Yeah, that's not the government's. It's a Federal Reserve note. It belongs to a private company.

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