Someone explain to me this "stimulus" that keeps Wall St. so damn happy...

[leveymg]

3. The Stim is over, but Quantitative Easing (QE2) keeps Wall St afloat with negative interest rate $$$

Last edited Wed Oct 30, 2013, 07:05 AM - Edit history (1)

The Fed has essentially adopted a strategy of "cheap money" that has pumped tens of trillions of dollars in negative real interest rate funds into the big banks. This flow of funds gives the banks a larger spread (profit) when they in turn invest or loan money out at far higher rates of interest.

These fed funds are negative real interest rate because the rates banks pay are so low that they are below the rate of inflation, hence the government is essentially paying the banks to borrow money.

Along with deficit spending and federal contracting (most of it war and military related), it's what's kept the US financial and economic systems afloat since the collapse of the dot.com bubble in 2000.