Making Money the Easy Way !!!

This is the case of a bank called Chase (no, no…its just a name :-D ) and its mum and Dad being the Treasury and The FED.

Chase, as any other kid on the block wants to make money and so it goes to daddy (the FED) and asks for money. Now, in times such as these the Fed would do anything to make the market moving and so gives the money at near zero interest rate. Now, Chase wants to invest his money in a place where he is going to make money and be sure of it. So what does our smart chap do? He goes to the Treasury and buys bonds worth millions (almost risk free) at an interest rate which is definitely higher than what the FED charged. Consequently, Treasury returns the money with interest rate and the former is returned to the Fed leaving Chase with a bagful of money.

Now suppose that Chase represents the entire banking community…

So what is the irony? The money that The FED lends to Chase was meant for increasing capital, lending to the public but then he (the bank/banks) didn’t want to take any risk whatsoever. So basically, it didn't help the economy in any substantial way.
And what does treasury do with that money…well, sometimes it just pays The FED!!!

So where does that leave us, "the common man"? Not in a very good place I suppose…