Thursday, Oct. 4, 2012 | 2 a.m.
With Election Day fast approaching, it’s clear that the president has the winning hand for two reasons. First, the Democratic Party has an outstanding ability to parse the electorate into small groups, then to appeal to those microconstituencies. And second, because of the incumbent’s best friend, chairman of the Federal Reserve, Ben Bernanke.
Here’s where the Fed comes in. Traditionally, lending depends on savings. The saver deposits into the lending institution, which lends that money to a borrower and takes the spread as a profit. Currently, the Fed is making money available to lenders at a minuscule interest rate and savers are driven to speculative investments such as the stock market.
The Fed funding makes cheap loans available to banks and government. Auto and home loans are now around 3 percent, student loans a similar amount, and the flood of easy money has moved the stock market to near-record heights. Taxes are low because the government has borrowed instead of taxing enough to cover its spending.
Since voters personally feel good from low taxes, high IRA balances and cheap auto, student and home loans, how could the Fed not make the difference?