The
word “inequality” is much in vogue these days. We hear almost daily
about the inequality of wealth, income and wages between the richest top
2 or 3 percent of people and the majority of the country’s wage
earners. But not much attention is given and not many marches and other
protests are addressing the huge inequalities between creditors and
debtors.
Of course the aforementioned inequalities, especially of wages and income, worsen the plight of individual debtors. One more distinction needs to be made – that between corporate debtors who receive many favored legal entitlements (even in bankruptcy) and individual debtors who are slammed and harassed by debt collectors.
Start with the Federal Reserve’s low-interest policy of the last five years with no end in sight. Savers who used to get interest of 4 to 5 percent from their bank or money market now get, if they are lucky, ¼ of one percent on their savings. This Fed policy is supposed to stimulate the economy but doesn’t work very well if there is not enough consumer demand in a recession to attract new investment. Meanwhile, the hundreds of billions of dollars held by small, middle to low income savers are generating no interest to help pay their living expenses.
The situation is bad and getting worse. These savers are being turned into “lockbox customers” in peril of having to actually pay the banks to hold their money. The Financial Times reports that “leading US banks have warned that they could start charging companies and consumers for deposits” if the Federal Reserve cuts interest rates further.
Why don’t all those bellowing Congressional deregulators of health and safety standards ever object, except for the pure Ron Paul libertarians, to the overreaching Federal Reserve, the biggest market regulator of them all?
Source and full piece: Ralph Nader, Common Dreams, 14 December 2013
Of course the aforementioned inequalities, especially of wages and income, worsen the plight of individual debtors. One more distinction needs to be made – that between corporate debtors who receive many favored legal entitlements (even in bankruptcy) and individual debtors who are slammed and harassed by debt collectors.
Start with the Federal Reserve’s low-interest policy of the last five years with no end in sight. Savers who used to get interest of 4 to 5 percent from their bank or money market now get, if they are lucky, ¼ of one percent on their savings. This Fed policy is supposed to stimulate the economy but doesn’t work very well if there is not enough consumer demand in a recession to attract new investment. Meanwhile, the hundreds of billions of dollars held by small, middle to low income savers are generating no interest to help pay their living expenses.
The situation is bad and getting worse. These savers are being turned into “lockbox customers” in peril of having to actually pay the banks to hold their money. The Financial Times reports that “leading US banks have warned that they could start charging companies and consumers for deposits” if the Federal Reserve cuts interest rates further.
Why don’t all those bellowing Congressional deregulators of health and safety standards ever object, except for the pure Ron Paul libertarians, to the overreaching Federal Reserve, the biggest market regulator of them all?
Source and full piece: Ralph Nader, Common Dreams, 14 December 2013
No comments:
Post a Comment