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This was in my local paper today:

The Federal Reserve adopted a plan on Friday allowing banks to set up the equivalent of certificates of deposits at the central bank. The move will help the Fed mop up money pumped out during the financial crisis and prevent inflation from taking off.

Under the plan, the Fed will offer so-called "term deposits" that will pay interest. Doing so will provide banks with another incentive to park their money at the Fed, rather than having it flow back into the economy.

........Excuse me, but wasn't the whole point for this money to flow into the economy in the first place? What has changed? We all know banks sat on these funds, built new branches immediately, and did dam precious little with it to help loosen the credit markets and make loans.

What's goin' on here folks?
 

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That's just what the Fed claimed. The reality was different

This was in my local paper today:

The Federal Reserve adopted a plan on Friday allowing banks to set up the equivalent of certificates of deposits at the central bank. The move will help the Fed mop up money pumped out during the financial crisis and prevent inflation from taking off....

.....Excuse me, but wasn't the whole point for this money to flow into the economy in the first place? What has changed? We all know banks sat on these funds, built new branches immediately, and did dam precious little with it to help loosen the credit markets and make loans.

What's goin' on here folks?
The Fed only claimed it was trying to get money to flow into the economy. But that was never its real goal.

The real goal was to provide enough taxpayer-absconded money to the rich and banks to pump up the stock market and re-inflate the housing/MBS bubble.

And these were largely "missions accomplished."

The Fed was extremely successful at re-overvaluating the stock market. At the same time, the Fed has been moderately successful at preventing homes from returning to their true market-level prices—thus maintaining housing unaffordability for many Americans, and preserving the wealth of multi-home-owning housing speculators.

Congratulations are definitely in order for both Helicopter Ben and Terrible Timmy.

They've been very successful in further siphoning off the wealth of middle class and working Americans—and further redistributing wealth upwards to their bankster and financial industry buddies.
 

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It looks like a simple method to pull a little unneeded cash out of the system to try keeping inflation under control. No great sinister plan, but it does give the Fed a little more control over the loose cash out there since it is not being loaned out.

Banks are very cautious loaning out money. I can't blame them with all the defaults and poor decisions being made the last few years.

Red
 
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