Thursday, July 10, 2014

Congressional income from Fed profits

here they are. The government does much better with low rates, low inflation and high income from the fed/  The growth in income is primarily a monopoly effect, economists have never figured that out. When the Fed suppresses short term rates it dominates the low end of the market and economies of scale take effect.


The matching federal funds rate. Income actually rose slightly when it allowed rates to rise. Until 2007 when income growth halted.  The Fed could not have planned it better if its goal was to maximize value to the government in  DC.

How did the Fed know it was time to raise rates? Look at 2004, its income sucked, it was going out of business. So it began to exit the loan business.  Do monopolies have these cycles?  Congress was reducing the deficit in 2004, inflation was 3%. The Fed was about to lose money loaning it out at 1% with inflation at 3%.

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