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.
10 comments:
If the rich do not a a risk free haven that at least pays a little, don't we risk all that money going elsewhere and causing a commodity bubble like we saw last year with the QE nonsense?
Imagine all the good that could be done with all that money if it was given to the poor instead of the rich... education, healthcare, it could be a game changer.
re Chewitup
Bubbles are mostly caused by stupid bankers (or maybe not stupid, losses are socialized now) offering easy credit. The commodity bubble has mostly been fueled by the deregulation and financialization of the commodity markets. Speculators and long only index funds make up most of the trading now instead of end users or producers of the commodities. Bettermarkets.com has a lot more info and studies on just how warped the commodity markets have become.
Back to the 91% upper tax bracket to force tax-deductible charitable contributions instead of hoarding at the top.
Yes, going elsewhere as in education, health care, science, infrastructure, energy, etc.
Brainstorming:
We could implement ZIRP for the policy rate, and only issue short term USTs that accordingly would have very little coupon. These people:
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
can take it or leave it for all I care as can the PIMCO and Warren Buffet people and the banks, etc....
To get folks who have been following a financial plan for the last few decades and have been saving for retirement thinking that they would get historic normal 5-6% in USTs (and now they are getting ZIRP and Grandpa is having to go back to part time work to make up the loss), Treasury could establish a new series of Savings Bonds that paid a decent (5 to 6%) ONLY AVAILABLE TO US RESIDENTS and would be capitated such that a US person could only receive a maximum of whatever 50k/100K/250K or so max interest from the Treasury for buying these bonds.... you would have to be a US individual though.
might be a fair way to get long time retirement savers back to where they thought they would be without enriching the elites with risk free USD balances...
Resp,
I would go to IOR and eliminate the deficit-debt offset. I would make tsys available at the Treasury window directly in something similar to E-bonds that would be furnished on demand at a constant rate. Those who wanted to save risk-free would have to accept this rate or look elsewhere. Want to cash out sone bonds before maturity. Do it at the Treasury window. Of course, this would all be handled electronically.
Mike, Have you sent a note to Bill Gross telling him to suck it up?
Not-rich people have pensions, 401k bond investment funds, and insurance policies that invest in Treasuries. Where is the factual basis for the claim that the rich "mainly" are the owners of Treasuries?
Anon,
Point taken, but these zombie people at the link below arent even US persons and they have HALF OF THEM!!!! ($5T), Fed has $1.7T (why?), Household sector has 900B but that is divided over 100M US households.
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
Resp,
It's the super rich that get all the tax advantages. Just look at Senile from Omaha who pays no income taxes while paying a flat 15% on qualified divs. which is why his sec. pays more taxes as a % of income than senile does though not in absolute dollar terms. However, rather than go after these type of deadbeats we call for a millionaires tax on a couple making $250,000 per year on a joint filing. Keep the sheeple fighting each other for peanuts while the super rich continue to bend average Joe over the table for a good lesson in stupidity.
Bread and circus while Rome burns. Nothing new under this Sun.
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