Dick Morris: Obama’s phony populism
As he has done before, whenever President Obama is in political trouble, he seeks to rally his base with a particular brand of populism designed to appeal to those who have an impaired memory of his previous diatribes.
But as he rails against income inequality, seeks a raise in the minimum wage and tries to lower the cost of college, we should all remember the policies of this administration that are causing income inequality.
Since Obama took office, 85 percent of all income growth has been concentrated in the top 1 percent of the population. (Under George W. Bush it was 65 percent, and under Bill Clinton it was 45 percent).
The bottom 99 percent have stagnated during the Obama years, but the rich have gotten immensely richer.
Since Obama took office, 85 percent of all income growth has been concentrated in the top 1 percent of the population….
This trend is a direct result of his quantitative easing program, in which the Federal Reserve purchases $85 billion of bonds each month, giving banks a windfall of cash to use as they wish.
In theory, they are supposed to lend the money out. However, the banks have asked the Fed to pay them 3 percent interest on funds they keep on deposit. So, without doing anything, banks get free money from the Fed vaults. (Why would a bank lend money to a risky borrower at 6 percent when it can get 3 percent from the Feds?)
This monthly infusion permits bankers to buy back stocks to add them to their stock option compensation, distribute Christmas bonuses or engage in risky trading in derivatives or other speculative investments. Despite having paid nothing to get the money, they have broad latitude in investing it.
Obama’s zero interest policy has blocked savings and limited investment, which is the only way to spur productivity. If productivity doesn’t grow, incomes don’t either, except through inflation.
This policy also makes a mockery of the elderly who have been thrifty and saved during their entire working lives in the hopes that their nest egg would provide them modest funds on which to retire. Not with zero percent interest, it won’t, unless they invest in risky stocks, where it could all be wiped out.