Banks/Banking

Amidst the current hysteria of the covid-19 pandemic, talk of general chaos and economic collapse have taken the forefront of peoples’ minds.

If you are a saver in a money market account or in a bank, you’ve already noticed your dwindling interest income as interest rates have been at their lowest in modern American history. Well, brace yourself. Your saving account has just become little more than a lock box, thanks to the supreme dictatorship of the Federal Reserve.
On Sunday, March 15, the Federal Reserve announced that it would cut interest rates to “near zero.”

(Image:  Wikimedia Commons)
The over 1000 point plunge of the stock market on February 27th and broader ruptures of the financial system last week have been yet another wake-up call for those who have been contented so far to “live in the moment” of fast money.

It takes only a cursory scanning of what counts as journalistic product in the significant mass media to see that whereas it may be impossible to keep public hospitals sterile, what passes for news and public debate is beyond normal standards of sterility—it is clearly a vacuum. We can largely discount the alternative media—including where I have been able to post—because this is NOT what feeds the public debate or motivates public action, whether official or unofficial.

When the World Health Organization announced on February 24th that it was time to prepare for a global pandemic, the stock market plummeted. Over the following week, the Dow Jones Industrial Average dropped by more than 3,500 points or over 10%. In an attempt to contain the damage, on March 3rd the Federal Reserve slashed the fed funds rate from 1.5% to 1.0%, in their first emergency rate move and biggest one-time cut since the 2008 financial crisis.

When the World Health Organization announced on February 24th that it was time to prepare for a global pandemic, the stock market plummeted. Over the following week, the Dow Jones Industrial Average dropped by more than 3,500 points or over 10%. In an attempt to contain the damage, on March 3rd the Federal Reserve slashed the fed funds rate from 1.5% to 1.0%, in their first emergency rate move and biggest one-time cut since the 2008 financial crisis.

This week, the markets took a 1000 point hit which was more than a little startling for many investors since the last 1000 point fall only happened three days prior… all in all bringing the financial markets to lows not seen since April 2008, and veering dangerously close to a precipice which has 1929 written all over it.

With Monday’s 1000 point stock market plunge the internet has been set ablaze with discussion of a new crash looming on the horizon. The fact that such a chain reaction collapse was only kept at bay due to massive liquidity injections by the Federal Reserve’s overnight repo loans should not be ignored. These injections which began in September 2019, have grown to over $100 billion per night… all that to support the largest financial bubble in human history with global derivatives estimated at $1.2 quadrillion (20 times the global GDP!).

While U.S. advocates and local politicians struggle to get their first public banks chartered, Mexico’s new president has begun construction on 2,700 branches of a government-owned bank to be completed in 2021, when it will be the largest bank in the country. At a press conference on January 6, he said the neoliberal model had failed; private banks were not serving the poor and people outside the cities, so the government had to step in.