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Who Really Benefits From More Fed Easing?

Well the government and the banks, of course.

From Shahien Nasiripour's HuffPo piece:

Rather than going to households and small businesses that need credit, though, that money instead is going to the biggest borrower of all — the U.S. Treasury Department.

U.S. banks now own more than $1.5 trillion in Treasuries and taxpayer-backed debt issued by mortgage giants Fannie Mae and Freddie Mac, according to the latest weekly data provided by the Fed. It's a 30 percent increase from the week prior to the Fed's Dec. 16, 2008, announcement that it was lowering the main interest rate to 0-0.25 percent.

Outstanding commercial and industrial loans at U.S. banks have fallen from $1.6 trillion in October 2008 to $1.2 trillion this past September, Fed data show. The $390 billion drop is equivalent to a 24 percent reduction in credit to businesses.

For families, it seems that it's never been harder to get a line of credit. For banks, they book an easy profit by borrowing at near-zero cost and lending it back to Uncle Sam.

Nice work, if you can get it.

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