If you’re truly a defender of the “1%” and indifferent to the plight of the poor in American society, don’t waste your vote on Mitt Romney. Barack Obama is your man. While the president proposes addressing society’s unequal distribution of income by raising tax rates on the wealthy, his administration stealthily enriches the rich and oppresses the poor. Under the Obama administration, the plight of the poor has gone from bad to worse.
In 2010 U.S. household income fell to its lowest level in sixteen years and poverty rose to a 17-year high, reports Bloomberg today. Median household income decline 2.3% and the percentage of people in poverty climbed to 15.1%. Median income is the lowest since 1996!
So, what is the policy response of the United States? More quantitative easing! Yesterday Federal Reserve Board Chairman Ben Bernanke announced that the Fed would purchase $40 billion in mortgage-backed securities every month until the economy improves. The Dow Jones Industrial Average promptly jumped 206 points, padding the pockets of the “1%” who own the lion’s share of the nation’s stock market equities.
While the Romney campaign predictably dissed Bernanke’s latest move as a politically motivated maneuver to prop up the economy before the election, the Obama administration has blessed Fed policy through its silence. Obama has blamed former President George W. Bush, lashed out against Congressional Republicans and denigrated “millionaires and billionaires” for the nation’s woes. But in 2010 he defended quantitative easing as good for the economy. And he has refused since then to join the growing chorus of the Fed’s critics.
So far, the Obama-Bernanke version of “trickle down economics” hasn’t done much to benefit the poor, whose numbers have grown steadily after more than three years of tepid economic recovery.
Meanwhile, Obama’s fellow anti-poverty warriors are decrying the growth of the payday lender industry. In a recent Richmond Federal Reserve Bank seminar on economic inclusion, various do-gooders assembled to hear Gary Rivlin, author of “Broke, USA,” a book that purports to explain the multi-billion dollar payday lending industry. In case you haven’t been paying attention, liberals and progressives excoriate payday lending because they charge “predatory” fees and interest rates.
Payday lending to the poor has become big business, noted Rivlin. One important reason is that many low-income families do not have access to traditional banking services. Writes John Reid Blackwell who covered the event for the Times-Dispatch:
A survey by the Federal Deposit Insurance Corp. also showed about 821,000 U.S. households lost access to basic banking services between January 2009 and June 2011. Roughly 10 million U.S. households, or 8.2 percent, have no access to bank accounts, according to the survey.
The survey shows that one-quarter of U.S. households have used at least one alternative financial service, such as non-bank check-cashing or payday lending loans, in the past year.
Why would that be? Could it have something to do with the fact that Bernanke’s zero-interest policy has sucked the profitability out of small bank accounts? Well, let’s see what the Wall Street Journal had to say in a March article, “Big Bank Weights Fee Revamp.”
Banks often lose money on accounts like basic checking that they use in part to lure younger customers. They offer the accounts in part because they hope to retain customers as they grow more affluent and use services such as mortgage and business loans and credit cards.
Many banks have already eliminated the free checking accounts that had been in place since the 1980s and dismantled rewards programs for debit cards. Bank of America currently charges a wide range of monthly fees for checking accounts, unless customers meet certain requirements, but the new plans being tested could change the amounts being charged and the triggers for fees.
Thus, not only is the Obama-Bernanke easy money policy hurting the elderly, whose income is plummeting on CDs, money market funds and other financial instruments, it is oppressing the poor. When short-term interest rates hit zero, banks lose money on small checking accounts. When banks lose money on small checking accounts, they stop marketing them, raise penalties and fees, and add restrictions. When poor people can’t afford basic banking services, they go to payday lenders.
Liberals, progressives and other good-government types, too obtuse to understand Economics 101, try to shut down the last remaining source of legal credit for the poor. What will happen when they run the payday lenders out of Virginia?
Hmmm. The goo-goos are a bit fuzzy. Participants in the Federal Reserve Bank seminar suggested creating alternate services, “which might include institutions such as credit unions.” Of course, starting credit unions is difficult and, in the words of Nancy Pierce, field coach for the National Credit Union Foundation, “they are not located on every street corner and they have to serve a defined field of membership.”
Never fear, when the Obamoids, Bernanke-ites and goo-goos screw up one part of the economy through their misguided government programs and initiatives, they can always concoct another program to fix it, even if that means screwing up something else. In the meantime, the poor will just have to suck it up while the brilliant know-it-alls who “manage” the economy figure out what to do next.