By JONATHON TRUGMAN
Last Updated: 12:09 AM, March 24, 2013
Posted: 11:12 PM, March 23, 2013
Much was made of the tiny European Union member Cyprus last week as regulators attempt to get their pound of flesh from the savings accounts of its banks, with a 10 percent tax on larger accounts.
And yet, the European Central Bank taxing citizens to pay up front for a $7.4 billion bailout of the banks still pales in comparison with the fleecing of the US depositor.
The Fed has orchestrated a massive transfer of wealth in America from the middle class and the poor to the wealthy. You could call it “Operation Reverse Robin Hood.”
Naysavers will object, “That’s outrageous!” I say, “Do the math.”
Here it is (in dollars to simplify): If a Cypriot put $1,000 in an island bank four years ago and left it there, today the saver would have a balance of $1,250. Take 10 percent off, and the saver is still up $125.
If a US middle-class family put $1,000 in JPMorgan or Citibank four years ago, the balance today would be $1,010 — less bank fees, which means it’s probably closer to a $950 balance. That’s $9.3 trillion in US deposits getting nothing in return except the warm, fuzzy feeling of bolstering the banks’ balance sheets.
This does not excuse the ECB action, but it puts into context what Ben Bernanke’s Zero Interest Rate Policy (ZIRP) has done for Americans. The Fed chief or the Obama administration would never be as blunt as their EU counterparts and call it a tax, but if Uncle Sam — through his policies — is reaching into the pockets of Americans . . . it’s a tax.
And what is this ZIRP tax for? A bank bailout just like Cyprus’.
The Federal Reserve has been engaged in its $3 trillion covert op, whether it admits it or not. The Fed has been robbing America’s poor and middle class and essentially underwriting the wealthy, the big banks and big business. The twisted maneuvers of grand larceny-like proportions have underwritten the greatest transfer of wealth this generation has ever seen.
Millions of responsible Americans — the type who try to put a little away from each paycheck — can’t earn a decent yield from their savings accounts.
Take Jamie Dimon’s whale of a bank, JPMorgan Chase, where accounts below $100,000 yield between .05 percent and .25 percent. Or Citibank, where accounts yield the same demoralizing rate. This is a direct byproduct of the Fed’s policy of ZIRP.
Another fundamental flaw in the Fed’s policy: It doesn’t address the lack of credit for regular, responsible, everyday Americans. The fact is, average Americans can’t earn a buck on their balance in the bank, and they can’t borrow a buck from the bank at these super-low rates.
The Fed has been putting out a kind and gentle message, claiming successes for things they have no deed to, except for making the Dow dance (which to most in the media seems to be the measuring stick by which the Fed is judged). Today, US banks are making billions — many are posting record earnings. Meanwhile, real average earnings for all US employees fell 0.6 percent from January to February, seasonally adjusted, the Bureau of Labor Statistics reported. This stems from a 0.2 percent increase in average hourly earnings being more than offset by a 0.7 percent increase in the consumer price index for urban consumers.
So the average American makes almost nothing in the bank, has no access to mortgage or small-business credit and is actually falling behind in real earnings.
Suddenly, Cyprus doesn’t look quite so pathetic.
Source: New York Post
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