Is The Fed Dead?

The Fed’s Cure Risks Being Worse Than the Disease

(Bloomberg Opinion) — The economic debate of the day centers on whether the cure of an economic shutdown is worse than the disease of the virus.  Similarly, we need to ask if the cure of the Federal Reserve getting so deeply into corporate bonds, asset-backed securities, commercial paper, and exchange-traded funds is worse than the disease seizing financial markets. It may be.

In just these past few weeks, the Fed has cut rates by 150 basis points to near zero and run through its entire 2008 crisis handbook. That wasn’t enough to calm markets, though — so the central bank also announced $1 trillion a day in repurchase agreements and unlimited quantitative easing, which includes a hard-to-understand $625 billion of bond buying a week going forward. At this rate, the Fed will own two-thirds of the Treasury market in a year.

But it’s the alphabet soup of new programs that deserve special consideration, as they could have profound long-term consequences for the functioning of the Fed and the allocation of capital in financial markets. Specifically, these are:

CPFF (Commercial Paper Funding Facility) – buying commercial paper from the issuer. PMCCF (Primary Market Corporate Credit Facility) – buying corporate bonds from the issuer. TALF (Term Asset-Backed Securities Loan Facility) – funding backstop for asset-backed securities. SMCCF (Secondary Market Corporate Credit Facility) – buying corporate bonds and bond ETFs in the secondary market. MSBLP (Main Street Business Lending Program) – Details are to come, but it will lend to eligible small and medium-size businesses, complementing efforts by the Small Business Association.

To put it bluntly, the Fed isn’t allowed to do any of this. The central bank is only allowed to purchase or lend against securities that have government guarantee. This includes Treasury securities, agency mortgage-backed securities and the debt issued by Fannie Mae and Freddie Mac. An argument can be made that can also include municipal securities, but nothing in the laundry list above.

So how can they do this? The Fed will finance a special purpose vehicle (SPV) for each acronym to conduct these operations. The Treasury, using the Exchange Stabilization Fund, will make an equity investment in each SPV and be in a “first loss” position. What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is acting as banker and providing financing. The Fed hired BlackRock Inc. to purchase these securities and handle the administration of the SPVs on behalf of the owner, the Treasury.

In other words, the federal government is nationalizing large swaths of the financial markets. The Fed is providing the money to do it. BlackRock will be doing the trades.

This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.

 

6 thoughts on “Is The Fed Dead?

  1. I don’t mind so much President Trump being the new Fed chairman. But the thought of another Obama (or any of the present crop of Democrats) being in that chair scares the living shit out of me.

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  2. Actually, it’s a little misleading and very, very complicated. Basically The Treasury and The Fed are intertwined now because of these SVR’s, which will subject The Fed to oversight they have never been under before.
    Trump just cut off the Rothchilds .

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    • Exactly, and this scares the batsnot out of me. Feds DO NOT belong in financial markets, and The Federal Reserve needs to be audited and eliminated. Period.

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  3. All that went before wasn’t enough, everything they have ripped us off for, the century of concerted wealth transfer scheming, what’s the next math term when you need to jump from 100 trillion to ________?

    They dusted off this false flag virus pandemonium. Think, 3 previous viral pandemics that where intentionally down played, made to appear nothing to be concerned with, virus’s that killed millions. They where setting the foundation for Corona, (King), virus.
    They where going to do this whole world orchestrated pandemonium panic thing, like the financial meltdown in 2008, perfect crisis as a means, when She was installed in 2016.
    Her seat at the west’s seat of power was in the bag, except the illusion formality of a nail biter of a close presidential election.
    Bread & Circus, too.

    It was her purpose, her thing.
    Take the money.
    Get the guns.
    No more America as we knew it.
    No muss no fuss no plaster dust.
    She and her serial rapist partner in organized crime, they brought false flag to a high deep state art form, refined it, polished it with a globalist luster, like some kind of elite pet. 911, Ruby Ridge, Waco, Fast & Furious Burns, Oregon, the myriad of mass shootings, which took the modern world system of control of the masses to the next level, in harmony with fake news yellow journalism, that Pulitzer and Rhodes created, for socially engineering the brave new world, (Bill Clinton is a Cambridge Rhodes scholar). Do you see how far back they have gulled us with fake events they use as a catalyst to get people into mind sets where we are not watching the elites hands?
    Get The money.
    Get the guns.
    You rule with absolute power.
    This is their intention, their overall objective, it is not rocket science, in fact it’s rather simple, get the rubes and the suckers the ignorant and mentally lazy to do the hard work.
    That is becoming wealthy and powerful 101 in our age. Imagine the strategic assets to be had now as the Wall Street Casino implodes, scooped up for pennies on the dollar. If not, who are they to care, they seriously got theirs already, got out, who cares.
    You got to think like a psycho globo=pedo, whats next after raping the west, the modern world version of rape & plunder, what’s left after you are so board with life’s pleasures when the world is your oyster and you are an uber wealthy oligarch, anything can be had, nothing challenges your social and cultural lifestyle, no struggle day to day, and your peers resort to drinking blood of fresh tortured and ritually sacrificed babies and little kids. Nothing compares to the thrill and the high of ultimate power of satanic blood ritual, nothing ever again so exotic as the warm blood packed with all that adrenal compounds from fear and terror and death.
    Think I’m full of shit here? Go right ahead. You do that, do their dirty work for them, ignore the reality of just how evil it all is, where these fuckers are leading the world.

    Always follow the money.
    Everything ultimately is about guns.
    Both are the only power.
    There is nothing but power.
    Don’t kid yourself.
    We dirt people, arming ourselves to the fucking teeth, we are power. The kind of power these scumbags can only dream of, power so legitimate it’s the ultimate of all prizes.
    They have to have that power or destroy that power if they are to become the ultimate power on the mortal plane.
    What do men with power want?
    More power.
    Absolute power corrupts absolutely.

    Our guns. Really, they are the most symbolic artifact of our world, they surpass Jesus Christ, blow by Allah, it’s not even so much anymore they are the pinnacle, the Acme of all land combat/conflict power, it’s now what those rifles in our hands represent, not that we can use them to shoot the motherfuckers dead, hunt them down to their last ratholes, it is the power they confer on us, the other ultimate power, of legitimacy.

    Thats next my friends.
    Guns.
    You watch.

    Everything to this point will be a fucking sideshow.

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