Recently major media sources have been reporting about the huge rise in bank deposits as if it’s some new phenomenon. More intelligent, informed and principled economic and financial analysts have been telling this story for decades, and increasingly since the Great Recession and the QE it spawned.
It should surprise no one that the majority of the huge stimulus issued by the UST and the Fed has found its way to the major US banks, who in turn cater to their large corporate clients. Couple that with record low interest rates and you have the recipe for fattening the hogs even more while the average American sees little of this largess.
Granted there are the $1,200 stimulus checks to families and the $600 add on for unemployment benefits, the former that does little and the later that disincentives going back to work, but these are for political cover more than real economic benefit. In reality, this spending out of empty pockets is only possible given the existence of fiat (fancy word for fake) currencies that can be manipulated to expand the money supply.
And what are the banks doing with all this cash? Well unless you are one of their big corporate clients they deem capable of ever paying back a loan, you will not be on that bread line, so much of it remains in the vault as reported, at least digitally.
And what do those banks and big corporate clients do with these loans (some under PPP will not even have to be paid back) provided at mandated depressed interest rates? Well given the fact that, at least on paper, they are not supposed to use any for stock buybacks, they can use it to build their balance sheets and use other earnings to do exactly what they have been doing – buybacks. Why spend money to grow a business to supply goods and services in an economy with little demand? So who benefits from such a scheme – the rich corporate heads that get even richer, while most Americans get even poorer. Yes, there is income inequality in America, but not for the smoke and mirror reasons we are told.
Keep in mind that it was governments who created lockdowns. While the correct response in a pandemic is high hygienic protocols, canceling the means for livelihoods is a death sentence to an economy and many of its citizens in ways yet to be seen, and you will see, hear and read about that with increased frequency. Every emergency spawns opportunities for those intoxicated with power.
This is not capitalism, this is cronyism, the elitist club pass-time of the power and money elite in government and business playing the same old game. While their talking heads in media and academia point the finger at capitalism and spout redistribution policies as a cure all, the same elite snicker in their soup, cheer the right think pundits on while they get fatter, literally by the day now.
If this sounds cynical please forgive me. I am losing faith that there are few if any financially and morally responsible people in power any longer. I am neither a Republican nor Democrat so this is not a partisan rant, but a cry of despair that we are so far gone that the burden of debt created by policy is not falling on those responsible, but those least able to shoulder it. In fact, it is our children, grandchildren, and likely even our great grandchildren and yet to be born who will actually bear the cost of such irresponsible and larcenous behavior.
So when you hear and read about the never ending and unresolved debate about how much even more stimulus we need, understand that those shouting the loudest and promising the most are the least to be trusted.