What substantiative actions are being taken by the reserve? To me it appears they are gunning for inflation with the low rates.
If I have $billions then I can invest my money in a way that hedges against inflation. Conversely if I make $20k/year I can't insist that my employer pay me in a fixed number of long oil positions. So it's not true that inflation always hurts the bourgeoisie and helps the proletariat.
It is true that inflation hurts a lender and helps a debtor. If inflation is at 10% and your mortgage at 6% then you're effectively making a 4% return on debt. Conversely the bank is losing money because the money repaid is worth so much less than the money lent. Bonus points for anyone that figures out why the banks aren't lending
As for Bernanke/cronies motivations; the federal government would like inflation to be as high as possible without risking collapse. So if "money for their masters" was the Fed's goal they will keep gunning for sustainable inflation. Bernanke/cronies can hedge against it, and the largest debtor in the world would prefer to pay a low interest rate.
Conversely the bank is losing money because the money repaid is worth so much less than the money lent. Bonus points for anyone that figures out why the banks aren't lending
Except that the bank isn't really lending its own money. It lends its depositors' money, amplified through fractional reserve banking. They can also borrow from the Fed, making their own bundle on inflation, as a debtor.
If I have $billions then I can invest my money in a way that hedges against inflation. Conversely if I make $20k/year I can't insist that my employer pay me in a fixed number of long oil positions. So it's not true that inflation always hurts the bourgeoisie and helps the proletariat.
It is true that inflation hurts a lender and helps a debtor. If inflation is at 10% and your mortgage at 6% then you're effectively making a 4% return on debt. Conversely the bank is losing money because the money repaid is worth so much less than the money lent. Bonus points for anyone that figures out why the banks aren't lending
As for Bernanke/cronies motivations; the federal government would like inflation to be as high as possible without risking collapse. So if "money for their masters" was the Fed's goal they will keep gunning for sustainable inflation. Bernanke/cronies can hedge against it, and the largest debtor in the world would prefer to pay a low interest rate.