She is failing to appreciate how Mr. Bernanke's extraordinary quantitative easing program, started in the wake of the financial crisis, has only widened the gulf between the haves and have-nots.

Quantitative easing adds to the problem of income inequality by making the rich richer and the poor poorer. By intentionally driving down interest rates to low levels, it allows people who can get access to cheap money on a regular basis to benefit in extraordinary ways.

The first beneficiaries are the big Wall Street banks, the so-called group of 22 primary dealers, which can borrow directly from the Fed, essentially free. Because banks are in the business of making money from money, they use the Fed's money to make more money by trading with it, investing it in government debt and pocketing the profit or by lending it out at wide spreads. Thanks to the Fed's low-interest rate policy, the big banks also make a lot of money by taking our deposits, which they also pay us virtually nothing for - my savings account pays me an annual interest rate of 10 basis points, or one-tenth of one percent - and lending them out at wide spreads. No other business on the face of the earth gets its raw material so cheaply. No wonder bank profits have soared.

Then there is the gift the Fed has given to Wall Street's traders and investment bankers. The traders benefit because they know - and have known for years, thanks to the Fed's telegraphing of its quantitative easing program - that the Fed will be a continuing buyer of their risky securities at (ever-rising) market prices. Since the onset of Mr. Bernanke and Ms. Yellen's policy, the Fed's balance sheet has grown to $4.5 trillion, from around $800 billion before the crisis. That's a whole lot of securities bought at high, profitable prices and paid directly to Wall Street traders. The Fed might as well have been paying the traders' seven-figure bonuses directly.

The Fed's low-interest rate policies have also been a bonanza for Wall Street's investment bankers - and their bonuses - as companies around the world race to raise debt capital at low rates. Wall Street, of course, takes a cut of every dollar of debt raised. The steadfastly low interest rates have also propelled the stock market to new highs. That, in turn, has also led to a bonanza of new equity being raised and more fees being paid to Wall Street.

Private equity firms also have benefited wildly from the low-interest rate environment. That allows them to borrow money cheaply and leverage the billions of dollars in equity - said to be $3.5 trillion these days - to buy and sell companies. The buyout firms, and of course Wall Street, also get fees from all this deal activity. The investors in private equity funds have benefited too, and this often includes state-employee and teacher pension funds. The endowment funds of colleges and universities have also benefited from the low-interest rate environment. But it is the fund managers, not the pensioners, who really rake in the money from this arrangement.

What if you are one of the millions of Americans trying to get by on a fixed income? Or is trying to live off savings? Ms. Yellen claimed in her Boston speech to understand the problem these Americans face.


http://mobile.nytimes.com/blog...uality-problem/

There is no doubt that having the dems in charge leads to this. I told you people this would happen. But you voted for the dems anyway. You made your bed ....

What is amusing here is that dems, after having exacerbating the situation in a big way, have now come forward to save us from the problem they helped cause. Yeah, sure. It will only get worse under dem control.

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I :heart; Q

Stocks tanked earlier this month upon Fed's announcement of QE ending, then instantly rebounded in response to their revised statements.

http://www.marketwatch.com/sto...al-reserve-2014-10-22

Fed is immune to politics, tpap

They should be but obviously are not.

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I :heart; Q

Congress, specifically the House of Reps, has responsibility of Fed oversight and regulation, not Prez.

"The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects. As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

http://www.federalreserveeduca...topics/fed_basics.cfm

I thought dem dems were for Mainstreet not Wallstreet, Looks like they got lost.

3rdworld, I know how the fed is set up and how it should be. But if you think that Yellen isn't doing the PiC's bidding, you don't know how things work.

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I :heart; Q