When people use the term Great Recession they are playing into the charade laid out by Federal Reserve and the Treasury Department.
The years 2008 through 2015 should be known as the Great Fleecing. During that time period the greatest transfer of wealth in the history of the world occurred. Some $4.5 trillion was given to Wall Street banks with the American people picking up the IOU and getting little more than working ATMs for the misery.
See newest post to see the numbers behind this heist.
And if you take the Wall Street banks modus operandi of leveraging all money on hand, then the largess from the Fed is conservatively $45 trillion.
This is the primary reason the US economy has not been able to recovery from the bank implosion of 2008. However the Fed — through Ben Bernanke and Janet Yellen — cannot point to this as the reason for the Great Malaise.
Surely if you inject $45 trillion, even into the US economy, you will get economic growth. You will get an economy that has 4%-5% GDP for a year or two, not one quarter of one year.
Remember, the Obama Administration is the first two-term presidency that has not posted a 3% GDP growth on an annualized basis for 8 years. Even Franklin Delano Roosevelt posted 3% growth year during the Great Depression.
In order to grease the wheels for the wealth transfer, wages and jobs needed to be curtailed, because the Fed could not allow the banks’ largess to be sterilized — circulated into the public — for fear of rampant inflation. The fear that the Fed had been that it had to keep rates at zero for the banks to make the largest Vig on that money, in order to bolster balance sheets as quickly as possible so the banks could survive.
If my cost of capital is zero, then whatever return I make in the market from buying Treasury bonds and reselling those notes to the Fed is pure profit. This is how the Fed attempted to heal the damaged balance sheets of the bulge bracket banks after Lehman Bros. demise.
The banks also funded company mergers, company debt offerings and stock buybacks. This activity kept the money sequestered somewhat and allowed a greater return for the banks. The secondary concern of creating an asset bubble in the market was seen as cost of doing business, which would generally benefit the upper classes more than any other segment of the economy.
These actions — to the greatest extent — are the reasons the American middle class has been decimated and no longer makes up the majority of the population.
Their lifeblood has been sucked out by the wholesale export of once good paying jobs, however they are still on the hook for higher taxes on what meager home they still own as well as the growing US debt to fund the banks.
Is it any wonder that in all of the 3,007 US counties, parishes and territories just over 50% of the population in each county is on government assistance of some sort.
This wealth transfer has taken the US down the road of socialism, where hardship grows and quality of life suffers.
Why does this matter now? Well the asset bubbles are growing weak and some say about to pop. The stock market is in correction mode — off over 10% from its highs last year — and if you want to get a little of that wealth for yourself it might not be a bad time to take some money off the table.
Having all your cash in the market now, may prove to be the same as mid-2008. Do you have eight years to try to recoup what you have now?
Think about it.