Culture Wars Era - is it moving into its final phase?

[David Horn]

(01-27-2017, 05:36 PM)Warren Dew Wrote:

(01-27-2017, 03:49 PM)X_4AD_84 Wrote:

(01-27-2017, 01:35 PM)Eric the Green Wrote: The prime rate and the interest received on bonds and money market funds is still near zero after 8 years. Of course that does not stop the corporate credit sharks from gouging the people.

Another thing. After the crash of '08 regulations came into play forcing more conservative reserve requirements on banks backing the cards. The way they helped allocate into the reserves was by increasing the spread between the prime and credit card interest.

True.  But the flip side of that is that the money was forced into supposedly zero risk reserves, namely US government obligations.  Seen another way, it was a way to force banks to fund the deficit at below market interest rates.

After the 2007 meltdown, the Fed pushed money into the banks to make them reliably liquid. This continued throughout the QE period, with banks getting stuffed full of cash. They decided that the amount of interest they pay (a pittance) can be more than offset by returning the money to the Fed, and placed in interest bearing accounts.  So basically, the Fed is giving the banks an unearned income stream.  You may wish to consider that as a topic for complaint rather than forced purchase of government obligations.

It may be that no one wanted to borrow all that money, but the increased credit requirements argue against that.  In short, the banks used the easy button rather than actually taking typical business risks.