>> Well, we still don't have another round of stimulus, Congress is still stuck on supposedly
negotiating. But the Federal Reserve has taken some matters into its own hands, offering
interest-free loans to some corporations, while simultaneously offering up loans with
interest, and a shorter period of time for states and cities to pay those loans back
compared to what they're offering to corporations.
So this is a great piece that was written by a publication founded by David Sirota the
daily poster. Matthew Cunningham-Cook writes about how Chevron, for instance, was able
to borrow money at half the rate as Wisconsin, meaning the oil giant was effectively getting
a government subsidy, while state taxpayers were being offered a predatory rate.
So the Feds loan to Chevron is 4 and a half years at 0.9%. Compare that to Wisconsin's
loan with an interest rate of 1.28% over three years so they have to pay it back at a shorter
period of time with a higher interest rate. Kentucky actually got an even worse loan deal,
for instance, 2% is the interest rate and they must pay back that loan in three years.
And when New York City needed a loan from the Federal Reserve, the Fed offered 1.9%
that had to be paid back in two years. They later offered 1.6% over 36 months. But the
point here is, oil companies, banks, massive corporations, they get these interest-free
loans, they have all this time to pay it back.
But when it comes to municipalities, when it comes to states, when it comes to the very
people who desperately need these loans in order to prevent job losses, they get these
higher interest rates and they have to pay back in a shorter period of time. So the Fed
has only purchased two bonds in its Municipal Liquidity Facility, lending just $1.6 billion
of the $500 billion of lending capacity it has.
Instead of lending at the rate that it lends to banks with the interest rate currently
at zero, the Municipal Liquidity Facility has offered loans of at least 1% for terms
of 24-36 months. So, you might think that 1% isn't that big of a deal, but it is if
it's a giant loan.
And especially if you have to pay that giant loan back in a shorter period of time, that
becomes much of a burden for the municipalities in the states that rely on this loans in order
to make ends meet. Especially now that Congress has become so useless in providing another
round of stimulus.
>> Okay, so let's break this down. The Federal Reserve can give at apparently any rate they
like because they're printing money and oftentimes for the banks they have an including right
now, zero percent interest rate. So they just give the money to the banks alone out to make
money off.
Now, if you were an approved bank. That's a good racket. Okay, you know why, you're
literally guaranteed money, it costs you nothing to get, and then you loan it out at a certain
percentage. So there's almost no way of losing. Now one of the excuses for that and sometimes
it's true, I'm giving it to the banks for very little, because they're facilitating
it going to, for example, in the PPP to small businesses, and the government is not structured
to find all those small businesses and to set up relationships with them right away.
The banks are facilitating that and for that they're taking a little bit of a margin on
the interest rate, okay, I would put that on the sensible end of the spectrum, right?
Okay, but if you're not an emergency and you don't have to facilitate something like the
PPP, then I'm still not sure why the banks get zero percent interest.
That makes no sense. By the way, if you don't know, the top of Federal Reserve branches
in New York, and the New York Federal Reserve is run by the top banks in the country, which
are in New York. So the Federal Reserve is run by the banks and gives the bank's money
at zero percent.
So when you look at it that way, it's actually not that surprising or confusing at all. What
makes it confusing is the fact that the Federal Reserve can print basically public money.
And then use it for private interests. Well, that's deeply problematic, and a giant problem
we have to fix later.
But now, when we come to this issue, I want to finish the analysis for you guys. They're
then saying, okay, but we're gonna lend it to the banks as zero not to facilitate something
that the government a bill that the government passed, but to give it to people.
In situations where they make a profit, but also now the Federal Reserve is just gonna
give it straight to corporations. So they're giving to Chevron. Wait, then the banks aren't
a middleman. Nobody's facilitating anything. Why is Chevron getting a better rate than
municipalities, which is government to government, arguably government to government, it's all
the US government anyway.
It's just the federal and the state. Sometimes the city's should be at a lower rate than
you give to private corporations. There's no excuse at all. There's no facilitating
or anything. They're like no, I yeah, but we're the government's owned by the big corporations
where they give campaign contributions to the politicians and bribe them.
So that's why we give them money for free and, but if you're in a city or state government.
Your the people that are affected our government workers like, cops and fire department and
other teachers. No, we don't care at all. And we're gonna charge you a higher rate and
the higher rate ranges from at the low end 1.28% is Anna told you all the way up to 2%.
And now you might seem like small numbers, but it winds up being hundreds of billions
of dollars in interest alone, that the cities and states have to pay back to the federal
government that Chevron doesn't have to. That's insane.
>> No, it's absolutely insane and states, they're in such an awful position right now,
because Congress again, I'm gonna keep repeating this has failed to provide any type of economic
relief.
And as a result, many of these public workers have either already been laid off or their
jobs are imminently at risk, and they're imminently at risk of losing their jobs. And so It's
so disgusting to see this activity happen time and time again. And I don't know Jack
it almost appears as though these free market capitalists aren't really a fan of the free
market.
>> Yeah. Because in a free market you don't have the Federal Reserve show up and be like,
hey, yo, we're printing cash. Interest-free while giving a middle finger to state, to
municipalities and all of the government worker who need these loans in order to remain employed
as Congress failed to provide stimulus.
I also wanna just give you some specific details on how much money they could save on interest
payments. If the Federal Reserve were lending to states the same way they're lending to
banks and corporations. So proponents say, that if you do away with the interest rate
for states that would allow municipalities to avoid mass layoffs and also save $160 billion
Annual interest payments, they pay Wall Street firms on their past debt.
According to a report from Action Center on Race and the Economy, that amount is enough
to help 13 million families avoid eviction by covering their annual rent or enough to
provide all 31.5 million unemployed workers $600 a week in Pandemic Unemployment Assistance
for 8 weeks. Because remember guys, yes, the federal government stepped in temporarily
and provided a more robust Unemployment Insurance Programme an additional $600 a week to individuals
who have been unemployed as a result of the pandemic.
Remember that states run their own unemployment programmes and they need funding for that
as well. States are in a real bad spot right now. And it's not just Democratic states.
I know that's what the Trump administration would have you believe. But funny enough,
the State of Florida reached out to the Trump administration.
Ron DeSantis, the governor of Florida reached out to the Trump administration was like.
We need some state funding, we're in a lot of trouble. So this is negatively impacting
Americans across the country. It's a failure of our federal government. Certainly a failure
of how the Federal Reserve Arbitrarily decides to lend at interest-free loans for the powerful
while screwing over states and municipalities.
And also a failure of Congress because they haven't been able to pass the stimulus that
average Americans need and states and municipalities meet as well.
>> So, funny enough, it turns out Republicans are in favor of defending the police. Because
remember, that's $160 billion a year that you're taking out of local governments.
And one of the things that local governments fund are the police. And so you're taking
that out and giving it back to the Federal Reserve. But Chevron doesn't have to, and
other corporations don't have to. They pay a much smaller rate, which means they save
collectively hundreds of billions of dollars.
And Anna pointed out that's not free market capitalism at all, but we're consistent on
this. We think that the government needs to step in. Not every time. Only when it's necessary,
right, It depends on the size of the job and what the job is. So I'm very much in favor
of the PPP that was a small businesses, and it was a startlingly successful program not
because it kept small businesses in business, but because it was structured right to make
sure they kept all their employees.
So I'm in favor of the income program. I'm not in favor of government programs that just
give away our money to the biggest corporations in the world. We're not reflexively pro government,
and it's in a more interesting dynamic then are you in favor of government or are you
in favor of the markets?
The answer is both. And it depends on the situation but for right wingers, they say
no, only the market the government is not your friend. The government's terrible at
everything except the cops, the fire department, the military and all of the things that we
love and helping Israel, okay?
But they're awful at everything else and I don't wanna give him a dime. And so I just
believe in the free market. Well what part of this is the free market. If you're a right
winger, you should be more upset than the left wingers. Or you have no ideology at all.
And you never believed anything that you said. The government just giving out tons of free
cash to corporations is the least free market thing you could possibly do. And by the way,
all this critique does not come from a progressive activist, it comes from Federal Reserve's
Commissioner, he's the one that brought out all this.
He's the one that brought out the Chevron example and said, look we're doing this, and
I don't know why we're doing this. If you think it doesn't make sense, you're right,
it doesn't make sense. And finally, the Chicanery there, that they do is, hey, we gave the Federal
Reserve $500 billion so they could lend out to the real businesses in America.
The multinational corporations were took care of the banks were took care of, but this for
real businesses $500 billion, that they could give out loans at low interest rates. But
we only use 1.6 billion of it. Because we don't really care. We don't really wanna help
businesses. We wanna only help the big businesses that bribe all the politicians.
So just be honest about it. That's exactly what's going on here. And among the reasons,
unfortunately, to our great disappointment, America has become one of the most corrupt
countries on earth because we legalized bribery.