More On The Fed (II)
Thus, for long after the panic of 2008 was over, recovery from the recession was impeded because banks have been earning interest on their excess reserves rather than making productive but risky loans to the private sector. The sluggish credit market led the Fed to announce that—for the first time in its history—it needed to get involved in making loans to entities other than commercial banks or the federal government.
Thus, since the fall of 2008, the Federal Reserve has been allocating credit all over the country, deciding who shall get loans (and thus survive) and who shall not (and thus face economic ruin). Although the U.S. Treasury has been widely criticized for bailing out investment banks and automobile companies, the Fed has quietly been reshaping credit markets on a grand scale, while attracting almost no attention from the press.
On a scale unprecedented in American history, hundreds of billions of dollars’ worth of resources are being allocated behind the closed doors of the Federal Reserve System’s headquarters in Washington, DC—for reasons known only to the politically appointed government officials doing the allocating.
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