Tuesday, February 7, 2012
Welfare for the rich, bigger than ever!
Welfare reform? Seriously?
We hear a lot of talk about welfare reform, as in, where we stripped welfare payments and other forms of governmental support from the truly needy. But welfare for the rich has never been greater.
Welfare for the rich comes in the form of interest on Treasury securities. It's money that the US government pays primarily to rich folks, because they are the major holders of government notes and bonds. (You don't see too many poor people at Treasury auctions.) Warren Buffet holds about $40 billion worth of US Treasuries, for example.
The US pays interest on its debt for what reason? On money that it has the total power to issue interest free if it chose to do so? Somebody please explain this to me.
The issuance of Treasuries has historically been a tool that the Fed and Treasury used to set short term interest rates, but now that the Fed pays interest on reserves, the issuance of bonds is unecessary. So the question is, why are we still doing it?
Take a good look at the chart above. It should shock you. We pay more money to rich people now than the amount we dole out for such necessary things as food stamps, unemployment benefits, health services, Veteran assistance, salaries and financial help to needy families.
No wonder why people like Bill Gross are complaining about the Fed bringing interest rates down to zero. His welfare payments are being cut.
But when that happens to poor people they are told to suck it up and stop being deadbeats. Children go without food, people become homeless, veterans who fought for our country are left to fend for themselves.
It's immoral. Simply immoral.