The Fed Targets Unemployment With More Money for Banks

Robert Pollin: The Fed breaks ground with unemployment target but pushing more money into banks without requiring more lending won’t solve the problem.

Paul Jay of the Real News Network interviews Robert Pollin, Professor of Economics at the University of Massachusetts in Amherst and founding co-Director of the Political Economy Research Institute (PERI).

This paragraph caught my eye:

OLLIN: The corporations are sitting on somewhere on the order of $2 trillion in cash and other liquid assets because they don’t want to invest. There is an issue here which also gets back to another question of financial regulation, which is, people who are hoarding cash who don’t see any opportunities also think that around the corner there may be another financial bubble, and they want to be primed to take part in the bubble, that is, when asset prices go up very, very quickly, for example, prices of oil or prices of food, or a stock market bubble. That’s where they think they’re going to make their big killing. They don’t want to put money into these investments that mean small expansions of business, you know, normal returns. And so they think that the financial system is still capable of generating another bubble. That’s because we haven’t established strong enough regulations to prevent bubbles from happening that then lead to another round of crashes.

More at The Real News

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