And we explained how the goal of the Fed for the last 30 years or so whenever there's been a recession is to do as absolutely minimal as possible while projecting the con that they're doing everything humanly possible.
Now we turn to the Fed and its relationship to banks.
Once again, its a con game to prevent mass panic if people truly understood how in the hole financially most banks are due to past speculative investing and the trillions in toxic mortgages still on their 'shadow' books...
So right now, the Fed lends money to their banking buddies to the tune of near zero interest which in turn they either lent to other banks at around the same percentage, or lent to the public at 10-20x the interest rate i.e mortgages, car loans, etc..
So how do the banks generate profit off that money?
Well one way is to take those funds and invest it into the market..
This is done in many different avenues.. A bank could use the money to buy up millions of shares of its own stock to give the impression to shareholders that earnings are stronger than they really are..
So many ways to make money in a corrupted, rigged market if you are one of those in the "IN"
But there's a second way the banks make money off the borrowed funds.. The Fed pays banks interest -- a quarter of 1% to hold onto the money for them and Not to let the funds circulate into the general public.
In other words, the Fed acts as a 'bank' for banks.. This way not only are banks really not paying any interest to 'borrow' the tax-payer money but are making an additional profit to acquire the funds..
Now back in October 2008, just as the last financial crisis was starting, Federal Reserve Chairman Ben Bernanke announced that the Federal Reserve would start paying interest on the reserves that banks keep at the Fed..
This caused an absolute explosion in the size of these reserves. In 2008, U.S. banks had less than 2 billion dollars of excess reserves parked at the Fed.
2 billion look like this: $2,000,000,000
1.8 trillion looks like this: $1,800,000,000,000
In less than five years, the pile of excess reserves has gotten nearly 1,000 times larger.
You may ask yourself, 'Why?'
If this money was circulated into the everyday economy, you'd have without any exaggeration or hyperbole, Weimar Germany or Zimbabwe hyper-inflation on US shores..
And that $1 bill in your pocket would eventually be worth a tenth of one cent..
And that loaf of bread would become $100... then $200...then...
It is not meant to--
Their recovery comes directly from Fed stimulus. Our recovery is supposed to come from being convinced the economic rains have stopped and now its sunny again to consume and borrow...
AP recently stated that, "Americans increased their borrowing in May at the fastest pace in a year... Credit cards (borrowing off of) reached its highest point since the fall of 2010."
At this moment, Americans in totality are $2.84 Trillion in debt.
This is why the Fed and by extension Bernanke is so deeply evil and so dangerous to the survival of our nation economically..
And interest rates can't be kept at near-zero forever...
"One reason that the excess reserves grew to an extraordinary level is that in October 2008, one month after the financial crisis when Lehman Brothers went bankrupt, the Bernanke Fed began paying interest on bank reserves.
Although it has been 1/4 of 1 percent interest, this risk free rate was not low compared to the Fed's policy of keeping short-term market rates near zero.
The interest banks received was and is an incentive to hold the excess reserves rather than lend to consumers and businesses in the risky environment of the major recession and the slow recovery.
The Bernanke Fed is now facing a $1.863 trillion time bomb, they helped to create, of excess reserves in the private banking system.
If rates of interest on income earning assets (including bank loans to consumers and businesses) rise, the Fed will have to pay the banks more interest to hold their excess reserves."