RUSH: I have been asked to expand on my explanation last hour of why the banks are not lending to the private sector but they are lending to the government. It's not hard to understand. It's very simple, but its complexity is what makes it simple. It requires a baseline understanding of how the whole process is working here. The problem is this. The banks first claimed they were going under and they needed TARP money. So they were required to take $25 million each or billion dollars each, some even didn't need it, like Wells Fargo. Now the banks are starting to pay some of the money back and people say, "Where are they getting the money to pay it back? If they had the money to pay it back, then why did they need it in the first place? Nothing's changed in the year since they took the money. So what's changed?"
Well, I'll tell you what's changed. Interest rates from the Federal Reserve to banks are near zero. They're not near zero for you, at a mortgage or at a credit card, but the interest rate that exists between the Fed and the banks is zero, or pretty much. So the banks can get free money by lending to the government. Now, the government has to borrow from someplace. What the simple explanation is, is that the government is borrowing money from the banks, there's zero interest on that. In exchange for it they're buying Treasury bonds, that's how you borrow or lend to the government, those bonds are a guaranteed 3% return. It's that simple. If you can lend to somebody that's guaranteed to pay you back 3%, as opposed to lending to somebody risky out in the private sector, who may not even be able to collateralize the loan, why would you do it? You got in trouble doing it once on the subprime mortgage business and you were forced to do that if you're a bank. So, if Obama really wants the banks to start lending to people in the private sector, the simple answer is to stop giving banks unlimited amounts of money for essentially free.
Now, let's say as an example, let's say a bank lends the government a million dollars by buying a Treasury bond. Now, the bank's wealth has not gone up a million dollars, but there is a guaranteed 3% return on the loan being paid back. If the Federal Reserve would make a change and raise interest rates to where the banks were not able to get essentially free money from the government, then you might have somebody at a bank interested in loaning some money to somebody other than the government. But as long as the interest rate from Fed to bank is pretty much zero and you get a 3% return on it, why screw with that? And so, again, the answer when Obama goes up and calls the bankers in and wails and moans and everybody else is wailing and moaning, "I can't get a loan, nobody will lend me any money," again the answer is Obama.
The answer is Obama and the Federal Reserve and free money. Stop giving the banks unlimited amounts of money for free in the form of interes-free loans at a guaranteed 3% and, bammo, the way you would do this would be to raise short-term rates for government money to 3%, exactly what the return is now, so that the banks zero out. If it costs them 3% to lend it, and they're only going to get 3% back when the government pays it back, then they zero out. They'll look for other places because nobody lends money without wanting to make money on it unless it was the subprime thing which, again, was the federal government. So the bottom line with all of this is the reason you can't loan money or borrow money, the reason it's tough to is because of your government's policy. And all the while this is being done, guess who Obama continues to beat up? Fat cats on Wall Street, most of whom voted for him. None of this is complicated. Once you understand the underlying baselines of what's going on, none of it's hard to understand.
I can make it simple for you. You just have to trust me and you have to trust yourself. If you want to understand why problems exist in the country today, if you have questions about it, your first answer should always be it's gotta be something the government's doing that's screwing me up, because it is. I'm going to ask these questions again: How many people had health care when Barack Obama became president, and how many lost their health care since he became president because they lost their jobs. What is that number? How many people had homes when Obama became president, and how many have homes today? How many people had homes that were worth something when Obama became president, and how many of those people's homes are now underwater since he became president? How many people had jobs when Obama became president, and how many have jobs today? How many had savings accounts with actual money in the savings accounts when Obama became president, and how many people have savings accounts with money in them today?
The answer to the disaster that is Obama and his policies is not to expand his policies even more. The answer is to change course. The answer to understanding what's going wrong is Obama and the Democrats in the House and the Senate. That is what is going wrong. Who they are ideologically matters. It's not hard to figure out who they are. You just have to believe it. Once you understand that liberals do things as you're seeing them do now, you also have to come to the conclusion that liberals lie. Because they never told you this was going to be the result of what they said. In fact, they said it was going to be the opposite, unemployment would never get higher than 8%. The financial system would be saved. Small business would be able to borrow money. Roads and bridges were going to be repaired. Schools were going to be repaired. Instead now, none of that's happened, but the solution to all that is to go caulk your windows. So it's very simple. It just takes courage to admit what you see. And a lot of people don't want to get ideological.
A lot of people think being ideological is closed minded. No, no, no, no. Being ideological is the epitome of being informed. Being ideological, understanding what a Marxist is, understanding what a liberal is, understanding what a socialist and fascist is, if you understand those things, you understand the modern-day Democrat Party. We're not saying that's what JFK was, we're not saying that's what LBJ was although you could probably peg the beginning of all this to LBJ, and we go to Jimmy Carter and we double down. And now we got Jimmy Carter on steroids, except Carter, he was just a bumbling, doddering old idiot. This is being systematically done on purpose by the so-called progressives.
Let me tell you something. Hugo Chavez, thunderous applause when he attacks capitalism at the climate change conference in Copenhagen, thunderous applause. You can read various chapters in Barack Obama's book and find that he has the same view of capitalism. His first job was as some minion I think at a law firm somewhere or some publication, and he writes of sitting in his cubicle in this private sector business feeling like he'd crossed enemy lines. There's no difference in liberals wherever they are. There's no difference in Marxists wherever they are. There's no difference in socialists wherever they are. They all hate capitalism. And that means they have to have a degree of dislike for the largest capitalist country in the history of human civilization: Us.