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Why Aren’t Presidential Candidates Discussing Who They Would Pick For Fed Chairman?
zerohedge.com / by California State Assemblyman Mike Gatto on 02/16/2016 18:28
Electing the next head of the Federal Reserve
The large and eclectic field of presidential contenders is in full-out campaign-promise mode, as voters demand positions on everything from ISIS to ethanol. With the economy so fragile, now might be a good time to seek commitments on who our next president will appoint to the Federal Reserve, and statements on what the proper role of the Fed should be.
Recent history is too important to ignore. After the Fed lowered interest rates to zero during the recession, it found itself lacking options for further “stimulating” the economy. It therefore began what it called Quantitative Easing (QE), which works more or less as follows: A bank buys a treasury bond for $97 million. Assume this bond matures in one year, and will be repaid at $100 million, or (very roughly) a 3 percent annual interest rate.
Under QE, the Fed creates new money. In our example, it will create $98 million, to buy this bond. By doing so, the interest rate has decreased to approximately 2 percent. And the bank made an easy profit, risk-free, on top of any commissions. But if the bank fails to lend out those funds, it does little for the economy.
The post Why Aren’t Presidential Candidates Discussing Who They Would Pick For Fed Chairman? appeared first on Silver For The People.
Source: http://silveristhenew.com/2016/02/16/why-arent-presidential-candidates-discussing-who-they-would-pick-for-fed-chairman-2/
