Filed under: video | Tagged: Federal Reserve, public banking | 5 Comments »
Fox in the Hen House: Why Interest Rates Are Rising
Posted on April 22, 2018 by Ellen Brown
The Fed is aggressively raising interest rates, although inflation is contained, private debt is already at 150% of GDP, and rising variable rates could push borrowers into insolvency. So what is driving the Fed’s push to “tighten”?
On March 31st the Federal Reserve raised its benchmark interest rate for the sixth time in 3 years and signaled its intention to raise rates twice more in 2018, aiming for a fed funds target of 3.5% by 2020. LIBOR (the London Interbank Offered Rate) has risen even faster than the fed funds rate, up to 2.3% from just 0.3% 2-1/2 years ago. LIBOR is set in London by private agreement of the biggest banks, and the interest on $3.5 trillion globally is linked to it, including $1.2 trillion in consumer mortgages.
Alarmed commentators warn that global debt levels have reached $233 trillion, more than three times global GDP; and that much of that debt is at variable rates pegged either to the Fed’s interbank lending rate or to LIBOR. Raising rates further could push governments, businesses and homeowners over the edge. In its Global Financial Stability report in April 2017, the International Monetary Fund warned that projected interest rises could throw 22% of US corporations into default. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Fed tightening, Federal Reserve, FOMC, interest rates, LIBOR, public banking | 22 Comments »
Dear Mr. President, Be Careful What You Wish for: Higher Interest Rates Will Kill the Recovery
Posted on June 11, 2017 by Ellen Brown
Higher interest rates will triple the interest on the federal debt to $830 billion annually by 2026, will hurt workers and young voters, and could bankrupt over 20% of US corporations, according to the IMF. The move is not necessary to counteract inflation and shows that the Fed is operating from the wrong model.
Responding to earlier presidential pressure, the Federal Reserve is expected to raise interest rates this week for the third time since November, from a fed funds target of 1% to 1.25%. But as noted in The Guardian in a March 2017 article titled “Trump Is Set to Win the Battle on Interest Rates, but US Economy Will Pay the Price”:
An increase in the base rate, however small, will tighten the screw on younger voters and some of the poorest communities who voted for him and rely on credit to get by.
More importantly for his economic programme, higher interest rates in the US will act like a honeypot for foreign investors . . . . [S]ucking in foreign cash has a price and that is an expensive dollar and worsening trade balance. . . . It might undermine his call for the repatriation of factories to the rust-belt states if goods cost 10% or 20% more to export.
In its Global Financial Stability report in April, the International Monetary Fund issued another dire warning: projected interest rises could throw 22% of US corporations into default. As noted on Zero Hedge the same month, “perhaps it was this that Gary Cohn explained to Donald Trump ahead of the president’s recent interview with the WSJ in which he admitted that he suddenly prefers lower interest costs.”
But the Fed was undeterred and is going full steam ahead. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, interest on excess reserves, interest rate hike, normalization policy, public banking | 47 Comments »
“Fixing Debt and Money with Publicly Owned Banking”: video interview by Australian blogger Phillip Watt
Posted on June 11, 2016 by Ellen Brown
Filed under: video | Tagged: debt crisis, Ellen Brown, Federal Reserve, public banking | 7 Comments »
The Citadel Is Breached: Congress Taps the Fed for Infrastructure Funding
Posted on January 16, 2016 by Ellen Brown
In a landmark infrastructure bill passed in December, Congress finally penetrated the Fed’s “independence” by tapping its reserves and bank dividends for infrastructure funding.
The bill was a start. But some experts, including Congressional candidate Tim Canova, say Congress should go further and authorize funds to be issued for infrastructure directly.
For at least a decade, think tanks, commissions and other stakeholders have fought to get Congress to address the staggering backlog of maintenance, upkeep and improvements required to bring the nation’s infrastructure into the 21st century. Countries with less in the way of assets have overtaken the US in innovation and efficiency, while our dysfunctional Congress has battled endlessly over the fiscal cliff, tax reform, entitlement reform, and deficit reduction. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, infrastructure crisis, public banking, quantitative easing | 64 Comments »
Dr. Tim Canova on “It’s Our Money”
Posted on August 28, 2015 by Ellen Brown
“No flow, no go.” That may be the simplest way to describe the critical role of central banks to the flow of credit and money into any monetary system. It was the lack of access to cash and bank liquidity that humbled Greece, Detroit and others. Ellen speaks with Dr. Timothy Canova, one of the foremost experts on our central bank, the Federal Reserve, about why their operation of our cash spigot determines who wins and who loses.
Read more and listen here.
Filed under: Audio | Tagged: Federal Reserve, infrastructure crisis, public banking, Timothy Canova | 4 Comments »
Preparing To Asset-strip Local Government? The Fed’s Bizarre New Rules
Posted on September 8, 2014 by Ellen Brown
In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Basel III, Federal Reserve, municipal bonds, public banking | 34 Comments »
Even the Council on Foreign Relations Is Saying It: Time to Rain Money on Main Street
Posted on September 1, 2014 by Ellen Brown
You can always count on Americans to do the right thing, after they’ve tried everything else. —Winston Churchill
When an article appears in Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet.
The September/October issue of Foreign Affairs features an article by Mark Blyth and Eric Lonergan titled “Print Less But Transfer More: Why Central Banks Should Give Money Directly To The People.” It’s the sort of thing normally heard only from money reformers and Social Credit enthusiasts far from the mainstream. What’s going on? Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, national dividend, public banking, quantitative easing | 86 Comments »
100 Years Is Enough: Time to Make the Fed a Public Utility
Posted on December 22, 2013 by Ellen Brown
December 23rd, 2013, marks the 100th anniversary of the Federal Reserve, warranting a review of its performance. Has it achieved the purposes for which it was designed?
The answer depends on whose purposes we are talking about. For the banks, the Fed has served quite well. For the laboring masses whose populist movement prompted it, not much has changed in a century. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: End the Fed, Federal Reserve, populist movement, public banking | 65 Comments »
Trump Takes on the Fed
The president has criticized Federal Reserve policy for undermining his attempts to build the economy. The best way to make the central bank serve the needs of the economy is to make it a public utility.
For nearly half a century, presidents have refrained from criticizing the “independent” Federal Reserve; but that was before Donald Trump. In response to a question about Fed interest rate policy in a CNBC interview on July 19, 2018, he shocked commentators by stating, “I’m not thrilled. Because we go up and every time you go up they want to raise rates again. . . . I am not happy about it. . . . I don’t like all of this work that we’re putting into the economy and then I see rates going up.” He acknowledged the central bank’s independence, but the point was made: the Fed was hurting the economy with its “Quantitative Tightening” policies and needed to watch its step.
In commentary on CNBC.com, Richard Bove contended that the president was positioning himself to take control of the Federal Reserve. Bove said Trump will do it “both because he can and because his broader policies argue that he should do so. . . . By raising interest rates and stopping the growth in the money supply [the Fed] stands in the way of further growth in the American economy.” Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, infrastructure crisis, Nationalize the Fed, quantitative easing | 35 Comments »