The 'New' Federal Reserve As Garbage Can For All Capitalist Debt

Yesterday, the Federal Reserve crossed its latest liquidity free money Rubicon. It announced it will provide unlimited credit–and assume the bad debts, not just of banks, shadow banks, and wealthy investors but for what it called 'Main St.'

But by 'Main St.' it doesn't mean consumers or households. It means that virtually any capitalist financial enterprise that has bad debt it can now dump it on the Fed.

Fed Needs 'QE-Infinity' Right Now, Morgan Creek's Yusko Says

In their announcement of its latest 'lending facility', as it is called, the Fed declared it would 'support' small business loans, student loans, auto securitized loans, and credit card debt. But that does not mean the Fed will 'support' consumers and assume their loans.

Oh no!

It means it will support the financial lenders making such loans for students, auto purchases, credit cards and small businesses.

It means these lenders can now dump their bad, defaulted, or otherwise non-performing debt from credit cards, auto loans, student or small business loans on the Fed. The Fed will eat it for them, and add it to the Fed's own $4 trillion plus indebted balance sheet–soon to rise to $8 trillion or more

I propose therefore we erect a new Statue of Money Capital on the steps in front of the Federal Reserve building in Washington D.C. A companion to the Statue of Liberty in the New York harbor. And on it we should inscribe the following motto:

"Give me your busted financial speculators, your bankrupt businesses, your huddled hedge funds yearning for guaranteed high yield. The wretched of your banking system. Send me your former millionaires with now empty accounts and I will make them whole again. I lift my greenback lamp beside my free money door. Come in and get what you want!"

What are markets for at all if The Fed now backstops everthing?

Commenti

Post popolari in questo blog

Charting the World Economy: The U.S. Jobs Market Is On Fire - Bloomberg

Charting the World Economy: The U.S. Jobs Market Is On Fire - Bloomberg https://www.bloomberg.com/news/articles/2019-12-06/charting-the-world-economy-the-u-s-jobs-market-is-on-fire Charting the World Economy: The U.S. Jobs Market Is On Fire Zoe Schneeweiss Explore what's moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast , Spotify or Pocket Cast . The last U.S. payrolls report of the decade was a doozy, beating expectations and doing its bit to keep the consumer in good health heading into 2020. That's good news given the various pressures still weighing on global growth. Here's some of the charts that appeared on Bloomberg this week, offering a pictorial insight into the latest developments in the global economy. U.S. Advertisement Scroll to continue with content ...

Continua a leggere

Fwd: The Looming Bank Collapse The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.

After months of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there's another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed. You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse. John Lawrence: Inside the 2008 financial crash The financial...

Continua a leggere

The repo market is ‘broken’ and Fed injections are not a lasting solution, market pros warn

By Joy Wiltermuth Published: Dec 7, 2019 9:35 a.m. ET Banks prefer to keep money at Fed instead of lending to other banks Getty Images Examining $100 bills. Getty Images By Joy Wiltermuth Markets reporter The Federal Reserve's ongoing efforts to shore up the short-term "repo" lending markets have begun to rattle some market experts. The New York Federal Reserve has spent hundreds of billions of dollars to keep credit flowing through short term money markets since mid-September when a shortage of liquidity caused a spike in overnight borrowing rates. But as the Fed's interventions have entered a third month, concerns about the market's dependence on its daily doses of liquidity have grown. "The big picture answer is that the repo market is broken," said James Bianco, founder of Bianco R...

Continua a leggere

Faber News Flow

Cerca nel blog