The Fed Took $3k from You and Gave It to Jamie Dimon

This seems to be thoroughly conflating two things:<p>&gt; We’ll start with this story on Fed Chair Jay Powell’s choice to transfer $1.1 trillion to large financial institutions over the past two and a half years when he helped raise interest rates, which is about $3000 from every single American.<p>&gt; How did this transfer happen? “Lenders got higher yields for their deposits at the Fed but kept rates lower for many savers,” wrote the FT, with subsidies higher for big banks than small ones.<p>The issues are:<p>1. The Fed sets an interest rate target. This has everything to do with controlling macroeconomic parameters and, unless there is some pretty serious corruption involved, should not give much if any consideration to the banks’ profitability.<p>2. Banks get away with paying approximately zero interest to most customers, and, critically, this rate does not scale properly with the rates set by the Fed.<p>As a result of #2, bank profits have a bizarre dependence on interest rates beyond all the quite reasonable ways that their profits should depend on rates. Arguably #2 should be fixed, but #2 being true does not mean that the Fed should keep interest rates low just to keep bank profits low.<p>(Note that bank profits are a very complicated function of rates due to large bank exposures to fixed income.)

The premise at face value is correct. But let&#x27;s consider what is left unsaid.<p>First, if the govt didn&#x27;t increase rates, we would have stubbornly high inflation. So instead of giving money to 1 specific person (Dimon&#x2F;bankers) we would be giving it to many faceless recipients (Halliburton, Blackwater, MVM [1], Hilton? ) . I&#x27;m not sure what is better, but in the former case, at least we don&#x27;t end up with inflation.<p>[1] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;MVM,_Inc" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;MVM,_Inc</a>.<p>Second, the govt is able to give this money away because govt is the sole price-setter the cost of money, via fed. This, despite decades of evidence that price setting -in any industry- doesn&#x27;t work. Yet, the US public continues to vote for status quo without any challenge to Fed policy. Ignorance is bliss, yet the majority of US voters insist to give money to Dimon. So, should one be outraged at handouts for dimon &amp; pals, even if the evidence makes it clear that this was willingly accepted by the majority of the US public ?

The fact that the fed continues to pay interest on reserves is a huge and unprecedented scam that probably will only be generally recognized years from now.

Is every regulation, like Basel III, really as simple as, favor big banks or small banks, as the article suggests?

Pretty misleading post from a clickbait title. The job of the fed isn&#x27;t equality, it&#x27;s to stop inflation and keep the economy stable. They did that reasonably well with the cards they were dealt. The elected government *should* tax these people&#x2F;corporations and help even out the situation where the rich get richer and the poor get poorer. There are many policies to do that and most countries have them.<p>But then roughly the same &quot;anti-fed&quot; crowd claims that this is regulation and shouldn&#x27;t exist.

Interesting post. Never thought of this.

Dimon et al. should have been serving time since 2008.

The federal government is incredibly inefficient, about 50x too large, most of the money is just shuffled into pockets of senators or their high value buddies. Despite <i>incredibly decisive </i> evidence of this, there is a massive backing to increase taxes. I truly don’t understand the disconnect here. If the federal government was on charity navigator, it would have negative stars for deliverability.