Household income for the bottom 90% has been stagnant for four decades:
So the Fed is robbing the purchasing power of our money as a matter of policy. In simple terms, the Fed is stealing purchasing power and delivering the stolen wealth to the financiers and banks, who borrow money from the Fed for near-zero rates of interest.
And what do the banks do with the money the Fed stole from us? They loan it back to us at 16% (or more). Those of us who haven’t just emerged from bankruptcy get offers from banks on a weekly basis: for transfers of credit card debt, new credit cards, cash advances, auto loans, home equity lines of credit, you name it.
A recent offer from a Too Big to Fail bank offered a teaser rate of 0% for a few months, after which the credit card’s interest rate reverted to 16%.
This is how the Fed rebuilds the TBTF banks’ insolvent balance sheets: it strips purchasing power from wage earners and savers and gives the banks free money which they loan to debt-serfs for somewhere between 5% and 24%, depending on the length of the loan and the collateral (or lack thereof).
As Harun explained, the Fed steals our wealth, transfers it to the banks who then loan our money back to us at 16%.
It almost makes you wish the Fed would just steal the money openly and give it to the banks and top .01% of financiers directly, without the sleight of hand of inflation and zero interest rate policy (ZIRP).