As the current American banks continue their theft of our national wealth, all the other needed and equally/more valuable national projects (e.g., healthcare for all Americans, renewal energy development, community infrastructure projects, enhanced education funding, etc.) go wanting for financial suppor (see budget story at The Huffington Post).
This stealing of America’s national wealth by the banks is briefly examined on the other side of the jump.
To begin our examination, we should look at the huge transfer of wealth that is taking place via the saving and credit system that is the "backbone" of our capitalistic society. By this transfer of wealth, I mean the differences between the rate paid on your savings account and the rates you pay on credit cards, auto or home equity loans.
Bankrate.comoffers the following data (overnight averages):
One year CD savings rate: 2.34 percent
Lowest interest credit card: 11.62 percent (4.5 times the savings rate)
Auto Loan (48 Month term): 7.89 percent (3.4 times the savings rate)
$30K Home Equity Loan: 8.88 percent (3.8 times the savings rate)
More equitable loan rates would be 1.5 times the savings rate for collateralized loans (e.g., auto, home equity, etc) and 2.5 times the savings rate for credit cards (i.e., non-collateralized loans) – especially when you consider that banks’ deposits are insured by the taxpayer-supported Federal Deposit Insurance Corporation.
Further pillaging of our nation’s wealth is taking place via the U.S. Treasury Department’s Troubled Asset Recovery Program (TARP) and various (too many to list and explain in this diary) Federal Reserve Bank (FRB) bailout programs – TARP and FRBank programs are taxpayer supported.
Now keep in mind that TARP and the FRB programs, which temporarily transfer wealth to the banks, are designed to facilitate lending – most likely at the rates previously highlighted. So the U.S. Treasury and the FRB are working with the banks to further confiscate your national wealth via new loans – note there has been very little discussion of ways to increase your income which would build wealth and facilitate consumer demand.
Equally, and possibly more cynical than any of the other programs mentioned in this diary, is that TARP and FRB money loaned (or gifted) to the banks for "re-capitalization" can be deposited with FRB and earn interest for the banks. Yes, you loan money to the banks so that they can lend and if they don’t lend you get the privilege of paying interest to the banks for not lending – kind of like the agricultural subsidy program.
Below is a passage from a speech which was given on 2009 April 3 at Charlotte, North Carolina by FRB Chairman, Ben Bernanke:
... some reserves can be soaked up by the Treasury's Supplementary Financing Program. Fourth, in October of last year, the Federal Reserve received long-sought authority to pay interest on the reserve balances of depository institutions. Raising the interest rate paid on reserves will encourage depository institutions to hold reserves with the Fed, rather than lending them into the federal funds market at a rate below the rate paid on reserves.5 Thus, the interest rate paid on reserves will tend to set a floor on the federal funds rate. Ben Bernanke, Federal Reserve Bank Chairman
So, the question is (and I paraphrase economist James K. Galbraith’s comments on Bloomberg TV): "What kind of economic system do we wish to have when this "saving" of the banks [i.e., pillaging of our national wealth] is completed?"
I look forward to a full-throat discussion of the above question.
Update:
Economist Robert Reich and former U.S. Labor Secretary, writing at TalkingPointsMemo,offers additional information on government spending and its impact on critical national programs.