Big Banks Are Stifling Economic Growth & Taxing Consumers
By: Dian L Chu
Dec 06, 2010
Have you noticed the price of oil lately? It’s $90 a barrel in a dismal economy with unemployment hovering around 10%. The problem with Fed chairman Bernanke’s latest QE 2 initiative is that he has just given more access of cheap money to the big banks.
Non-Productive Use of QE Money
And what are they doing with all this cheap money? Nothing productive from an economic standpoint. Instead of lending the money to entrepreneurs, business projects, and venture capital initiatives which actually create jobs and foster much needed economic growth, the big banks are just taking this cheap money and pouring it into commodities like crude oil, copper and grains.
Taxing Consumers by Bidding Up Commodities
So not only are the big banks doing nothing productive with the latest QE2 capital, but they are in essence dragging down economic growth with a counterproductive tax on consumers when they can least afford it. The last thing the economy needs with 10% unemployment is to be paying a hefty tax on food and energy products, especially given the fact that these markets are well supplied, and are necessity items for consumers.
Actually, Mr. Bernanke would have been better served by taking liquidity out of the system, as commodities would be much cheaper with higher rates, and the economy would be much more inclined to spur economic growth and job creation with lower food and energy prices.
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