Posts Tagged ‘Federal Reserve’

“As the Financial Times reported yesterday, more than 1 million U.S. consumers are ‘at least two months behind on car loan repayments,’ noting that the delinquency rate in the $1.1 trillion market hit its highest level since 2009. And that’s not just limited to subprime borrowers. That figure includes everyone with a U.S. car loan….

The financial Times also cites, ‘Delinquencies on credit cards also rose by about the same amount over the period to 1.79% – the highest since 2011. The rise in bad loans comes despite persistently low borrowing costs and unemployment levels – suggesting lenders may be letting consumers take on bigger debt burdens than they can handle.

Lending to consumers with weak credit scores has been one of the fastest-growing parts of the industry. Still, the increased delinquency levels follow a period of rapid expansion and could be a natural consequence of that growth. Separate figures published on Thursday by the New York Federal Reserve showed the total amount of debt held by American households rose last year at the fastest clip since 2007.'” -Porter Stansberry

“Japan recently announced it was implementing a negative interest rate.  The central banks of Denmark, Norway, and the European Union are already using negative interest rates.  And last week, Janet Yellen, head of the Federal Reserve, said the Fed is considering it, too….  A negative interest rate means the price of money is below zero….  So why are central banks setting negative interest rates?  They’re experimenting.  They hope negative interest rates will lead people to spend more, and borrow more, and invest more.  They hope negative interest rates will lead to economic growth.  Why?  Because if it costs you to keep your money in the bank, you’ll have more incentive to take your money out and spend it.” -Tom Dyson

Sweden, Denmark, and Switzerland all have negative interest rates.  Negative interest rates mean the lender literally pays the borrower for the privilege of lending him money. It’s a bizarre, upside-down concept.  But negative rates are not some European anomaly.  The Federal Reserve discussed the possibility of using negative interest rates in the U.S. at its last meeting.  When you deposit money in a bank, you are lending money to the bank.  However, with negative rates, you don’t earn interest.  Instead, you pay the bank.” -Nick Giambruno

“The Fed (Federal Reserve) and the government have created a false boom.  It’s not sustainable.  The last boom—from 2003 to 2007—was a false boom, too.  So was the one before that.  By manipulating interest rates, the Fed injects adrenaline into the economy and stimulates it.  But this doesn’t allow the market to cleanse itself of the sins of the previous boom (which the Fed’s stimulation also caused).  So, the malinvestment builds up and compounds.  And the issues that caused the crises never get addressed.” -Tom Dyson

“The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves….  Deficit spending is simply a scheme for the confiscation of wealth.” -Alan Greenspan before he was chairman of the Federal Reserve.

“The Federal Reserve, virtually in total control of the nation’s monetary system, is accountable to nobody—
and this strange situation, if acknowledged at all, is invariably trumpeted as a virtue.” -Murray Rothbard