skeeter,
When bankers own so many bad loans that their equity is essentially wiped out, the Fed has no choice just but to lower real interest rates to negative territory.
When real interest rates are negative, banks are essentially getting paid to hold deposits even if they get very low returns in short term treasuries and other safe investments. In other words, massive amounts of wealth are transferred from mom and pop that worked, saved, lived a responsible life, and put something aside for their old age, kids etc... to a bunch of corrupt, evil, incompetent bankers.
That's what the Fed is about.
It's a wealth transfer mechanism.
When it buys treasuries from a government running a deficit it transfers money from tax payers to government in a way that tax payers don't understand and are essentially powerless to do anything about (they can't vote the Fed out the way they can vote our a politician that actually raises taxes for things they don't like).
When it lowers real rates to negative levels, it transfers wealth from savers to banks.
It's an intrinsically evil, corrupt, and economically unsound system.
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