Following the annual Jackson Hole meeting of U.S. central bankers a week ago, the Vice-Chairman of the Federal Reserve admitted something that most ‘conspiracy theorists’ had already deduced… that the private bank not only picks winners and losers in the economy, but overwhelmingly does so for the 1%ers.
Stanley Fischer: Well, clearly there are different responses to negative rates. If you’re a saver, they’re very difficult to deal with and to accept, although typically they go along with quite decent equity prices. But we consider all that and we have to make trade-offs in economics all the time and the idea is the lower the interest rate the better it is for investors.
So with this in mind, just who exactly are these ‘winners and losers’, and where have central bank policies affected each in their retirements, wealth, purchasing power, and investments? On Sept. 3, Chris Martenson of Peak Prosperity laid out the breakdown.
- Big banks
- The government
- Entities with large stock (equity) holdings
- The wealthiest 0.1%
- Borrowers (the heavier the better)
- Well-connected insiders whom the Fed tipped off in advance
- Anyone with money in a checking account
- Anyone with money in a savings account
- Anyone with money in a CD
- Anyone depending on bond income
- All pensions
- First time homebuyers
- Those who invest based on fundamentals
- Everybody alive in the future, when the bills come due
Since 2010, the Fed has purposely gone beyond its mandate in not only forging its policies to protect the stock markets over bonds and the rest of the general economy, but they have also admitted they look at what QE and lower interest rates do to foreign markets as if they were the central bank of the world, not just for the United States as their charter outlines.
The sad reality is that following the fraud, corruption, and rampant speculation that should have ended the majority of big banks in both Europe and the United States during the Credit Crisis eight years ago, the central bank decided that they would not only bail them out with tens of trillions of newly printed dollars, but also aid them in continuing the same risky bets that led to the crisis in the first place. And as a result, the top 1% are richer now than at any time in history, and the other 99% have been left holding the bag with raging debt and price inflation, and a system that now would collapse if zero or negative interest rates were ever raised by a significant amount.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.