Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

The Fed is Starving Economy of Interest Income

Warren Mosler
Traders work in the ten-year U.S. Treasury Note options pit at the Chicago Board of Trade in Chicago, Illinois, U.S.
Daniel Acker | Bloomberg | Getty Images

The Fed again deserves low marks for another year of being part of the problem rather than part of the answer.

For 2011 the Fed has again failed to address the interest income side of its policies.

For example, the Fed turned over approximately $80 billion last year to the Treasury, and probably a lot more this year with its larger portfolio, with no mention that the same $80 billion would have otherwise added that much to the income of the rest of the economy.