Fed playing a costly game

To the editor:

If you are a small business owner, it’s highly probable that you need to borrow money to grow your business. You’ll need loans to buy equipment or replenish your product stocks. In most cases, you’ll go to a bank to borrow money. Loan interest is almost the same at most lending institutions, sometimes making it hard to borrow the amount you need because of the repayment rate.

To add insult to injury, if you have money on deposit at your bank in a personal account, you’re most likely earning almost nothing. One-half of 1 percent is about the standard now. Traditional saving vehicles are so low that if you depend on savings interest to supplement your retirement income your lifestyle has to be constantly revised downward. All the while, everything you need or buy keeps going skyward. You’re losing ground every day.

But, alas, the Federal Reserve comes to the rescue. Well, not to your rescue, but to the banking industry’s rescue. You see, banks can borrow money from the Federal Reserve at zero percent and then loan it to you through your credit card, auto loan or mortgage at God knows what interest rate, and then keep all the profit and pay you one-half of 1 percent on your deposits. Wouldn’t it be wonderful if you could borrow money at zero percent interest? They’ve been doing it for five years now, using your tax dollars to drive your savings rates into the toilet. Recent studies show retired people are getting poorer each year, spending their savings just to stay afloat and pay bills. Interest income has gone the way of the carrier pigeon. No wonder the stock market dropped more than 300 points when the Fed chairman said the gravy train was about to come to a halt within a year or two.

Folks, there’s not a lot we can do about it, because the Federal Reserve doesn’t work for the government, it works for the banking industry. That’s a fact – look it up if you doubt it.

Call your congressman and ask him or her why you’re going broke and the banking industry is setting new profit records while using your money. You’ll be amazed at the gobbledy-gook answer you get.

You see, this is deregulation at its finest, because Congress doesn’t control the money supply or who gets it. That’s why the rich get richer and everyone else gets gouged. Still think less government and less regulation is a good thing? Still think it’s a good idea to deposit money and get one-half of 1 percent interest but pay 17.99 percent to have the bank use your savings to finance credit card purchases? Good luck if you do.

Stan Galownia

Mingo Junction