I think there are some repeated paragraphs - did the whole article get pasted twice?
Howie Hawkins’ Green New Deal proposes nationalizing the Fed:
Looks like !
"Trump has been pounding the Fed and threatening to take away Chairman Powell’s Chair for months. He is demanding sharp reductions in interest rates. He renewed his denunciation after the Fed’s quarter of a percent cut this week, tweeting that it was nowhere near enough!"
I am reading Arthur Abernathy’s “1930: Europe in the Shadow of the Beast” (2019).
In many ways, this period of time ca 1930 resembles our own, including the renewed rise of fascism as a worldwide phenomena.
Interest rates are noted by Ralph Nader as being historically low, but that may rank as an understatement for the books !!
I was a full-fledged stockbroker for eleven months, just after the crash of '87. To me, these ridiculously low interest rates have always been a puzzle - i.e., they make no sense.
But of course this is my problem. The powers that be - to them it makes perfect sense, else they would not do this - it is worldwide - interest rates in parts of Europe are actually nominally negative, I understand, and elsewhere, if one takes into account inflation, they are effectively negative virtually everywhere.
Suppose deflation were coming soon to a planet near you?
Where to stash one’s loot?
Maybe lend it to governments, because in effect this means ‘the people’.
And ‘the people’ have to work to eat, don’t they - and they are already slaves in many ways - aren’t they?
Problem partly solved - bets hedged - money safe - the people are on the hook ~
PS: I just have to add this excerpt from the chapter in “1930:…” that I am reading now - it is too good to pass up:
Setting - Berlin ca 1930, new opera/new kind of opera - political and social - “The Rise and Fall of the City of Mahoganny”, by Bertolt Brecht & Kurt Weill:
"Near the end of the opera Macheath is in jail, about to be hanged. He speaks to the audience: "I represent, he says, a vanishing class, the bourgeois artisans. I was a proper small-scale thief, but we artisans are being swallowed up by large concerns backed by banks. How can I compete with a bank? What is a picklock to a bank share? I am, he laments, a victim of circumstance."
Good column Ralph. The Fed’s nominal reasons for this are pathetic, (too low inflation, helping workers) they just caved into Trump’s bullying to goose the stock market to help has re-election… I’d quibble with downplaying inflation, anyone who rents, buys food, clothes, insurance, pays utilities, uses transit, knows there is more than enough inflation already, but its downplayed to reduce cost of living adjustments and social security payments
There is no widespread interest on savings at 2.25 or 2.50% as Ralph states. While you can find rates like that at a few banks generally with a large deposit, the rates are not guaranteed to stay that way and can change at any moment. They are just lures to attract capital.
Real interest rates on savings before the 2008 crash were around 5%. After the crash a nonsensical reason was given that that could no longer be sustained and rates were reduced to a very small fraction of one percent. This was outright theft to everyone who held savings in a bank. That theft must be in the trillions by now. I’m sure the money saved was used to prevent the insolvency of many zombie banks, and also to fill pockets.
This is an incredible robbery of the public that is never talked about. Banks did not lower their loan or credit card rates. They just cashed in and the explanation for the whole deal was about as convincing as the explanation for why building seven came down on 9/11.
A lousy article. I don’t know who to blame: the writer, the editor, the publisher… Whole parts were cut and pasted a second or third time.
The motivating subject of the article is the recent rate change by the Federal Reserve Bank. Just which rate isn’t stated explicitly here or in other articles. I have heard someplace that one of the rates that got reduced is the rate the Federal Reserve pays banks to park excess reserves “uselessly” at the Fed. (Where they possibly are lent to the Federal WashDC Government.) Reducing this rate is considered a good thing, since it supposedly will induce bank to instead lend the money into the real economy. Several radical leftists have proposed the very same thing, and of charging banks for keeping reserves at the Federal Reserve bank.
(I doubt that many can explain why banks are required to deposit a reserve at the Federal Reserve bank.)
As for what the short term interest rate should be, no one knows because the government intervenes so much in it. And everyone wants the government intervention to be to their advantage or aid their special interest group, not necessarily for the greater good.
Now some varied remarks.
I think that manysummits, or the A. Abernathy book referred to, might be confused. I just looked in Wikipedia, and that play doesn’t have a character named ‘Macheath’. Contrast with Brecht’s and Weill’s better known play, ‘The Threepenny Opera’, which is all about Macheath, their take on an older British play called ‘The Beggar’s Opera’.
Ralph Nader wrote “But companies are piling up idle capital without knowing what to do with it other than to spend trillions of dollars on unproductive stock buybacks.”
Which misunderstands/ misstates. Stock buybacks serve two purposes. The better purpose is as an alternative to paying a dividend. Shareowners can decide whether they want to incur the taxes of receiving a payment. This is better than the company engaging in dubious investments or empire building, or explicitly paying management more, and shareholders can decide where to then invest the money. The other stock buyback purpose is a less laudible way of paying the top management more. First issue the stock to the manager, then buy it back at a nice price.
(Many people would rather that the company pay their workers bonuses of the excess capital, or pay it in taxes to various governments, or decrease the prices they charge consumers… The people here are much more interested in enjoying the pay now than in investing in the future.)
It is ‘manysummits’ that was confused, I am afraid. Just checked the book, p.74, and yes, Macheath is the character in “The Ballad of Sexual Slavery”, with tune “The Ballad of Mack the Knife”, written in one day in a hurry, apparently, poem lyrics by Brecht, music by Weill.
Sure hope I’ve got that right - I’m more familiar with climate science. Apologies for the confusion !