Classifieds

The Federal Reserve has distributed more than $15 billion over the past four weeks to banks and money market funds simply for not investing the cash of theirs and their investors. The payouts have increased dramatically this year as the Fed is raising interest rates in an attempt to curb inflation.
The Fed is saying interest rates need to go up in order to curb demand for goods and services and thus lower the incentive for producers to raise prices. But the way the Fed goes about raising rates is virtually paying off the financial industry to lend and invest less.
Normally, money sitting in the accounts of a bank's customers is just dead weight on the bank's balance sheet, pushing the bank to make more loans. If banks want to make more loans, they generally have to offer lower interest rates. The way the Fed raises interest rates is by paying banks an interest on the money the bank agrees to keep dormant. The interest rate now stands at 3.15 percent, more than what a bank would have received on a standard residential mortgage a year ago....