A Quote by Michael Hudson
The economy is being run primarily by the banks for their own interest.
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The economy may be complex, but Americans understand that the Wall Street banks control an outsized portion of the economy and that they have an outsized interest in their own profits.
You know policy is driven purely in self interest. The Federal Reserve Bank and the commercial banks and the Wall Street banks are not acting in the interests of the population at large, they're acting purely in their own self-interest, which is a shame because they're actions dictate the reality for 300 million Americans. But they don't see it that way, they see it only as a way to preserve their own self-interest.
The Fed has a lot of power in the economy because it has a big impact on the supply and cost of credit, that is, interest rates. It also plays a key role in supervising banks and historically has seemed to take it easy on the banks when it shouldn't have, such as in the lead up to the financial crisis.
To save the banks from making losses that would wipe out their net worth, you'll have to get rid of Social Security. It means that you'll essentially have to abolish government and turn it over to the banking system to run, with an idea that the role of governments is to extract income from the economy to pay to the bondholders and the banks.
It does not stand to give banks millions of dollars at an interest rate of one percent, when banks charge students an interest rate of 6 percent. Why should the banks be scalping students?
Mathematically, debts grow exponentially at compound interest. Banks recycle the interest into new loans, so debts grow exponentially, faster than the economy can afford to pay.
No business in the economy has the easy money that banks get to play with.... The existence of banks with single digit amounts of equity is a completely unhealthy existence -- that is not only a risk for the banks, but for all of us.
I think we're in the take-the-money-and-run stage of the economy. So the banks may go under, but the bankers, who make the policy, clean up.
Government should eschew suasion and directives to banks on interest rates that run counter to monetary policy actions.
The Federal Reserve's job is to do the right thing, to take the long-run interest of the economy to heart, and that sometimes means being unpopular. But we have to do the right thing.
That's the problem with the financial sector. Banks and the financial sector live in the short run, not the long run. In principle the government is supposed to make regulations that help the economy over time. But once it's taken over by the financial sector, the government lives in the short run too.
Rush Limbaugh has answered - it's the rich liberals who own the banks and run the government, and of course run the media, and they don't care about you - they just want to give everything away to illegal immigrants and gays and communists and so on.
Before the 1970s, banks were banks. They did what banks were supposed to do in a state capitalist economy: they took unused funds from your bank account, for example, and transferred them to some potentially useful purpose like helping a family buy a home or send a kid to college.
Negative interest rates hurt banks' balance sheets, with the 'wealth effect' on banks overwhelming the small increase in incentives to lend.
If the authorities constrain banks and are aware of the activities of fringe banks and other financial institutions, they are in a better position to attenuate the disruptive expansionary tendencies of our economy.
When I started the business, only banks operated at airports, only banks issued travellers' cheques, only banks issued international payments, only banks serviced their own branch networks.
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