The Federal Reserve takes advantage of the Covid-19 crisis
Charles E. Carlson
The Coronavirus has given Wall Street’s controlled press an excuse to hide the vital facts from us. Reuters is perhaps the most respected New York news service. But while describing the financial maneuvers of the Federal Reserve System (FED), it has failed to explain the most vital question. Where does the FED get all the money it is spending to prop up the economy during the Covid-19 nightmare?
Reuters, Bloomberg, and others, including the Wall Street Journal and former NY mayor, Michael Bloomberg’s News, ignored the truth about the Federal Reserve Bank… not a truthful word about who runs it. Especially ignored is how the FED’s vast dollar assets are created, and how its money manufacturing affects our lives. Never a word about diluting the value of dollars we hold, spend, save, and depend upon. Never once does Reuters tells us where the FED will get the six trillion dollars it plans to provide to our Congress, most of which we are told between the lines, will be loaned or given to the largest banks and financial institutions!
Reuters writes: “The U.S. central bank, arguably the most powerful financial institution on Earth, has more than $5.3 trillion of assets on its books – the equivalent of roughly a quarter of annual U.S. economic output before the crisis.”
Reuters neglects to tell us where the FED assets came from or how it will create (electronically, of course) all the money it provides under the ten steps Reuters describes herein. This writer has never seen any major national new source disclosing where the Fed gets its money. Readers are left with the fuzzy and unexplained feeling that the FED’s funding comes from actual reserves on its balance sheet. Instead, the FED creates its own assets by writing checks on itself. The Treasury then spends the newly created money at the behest of Congress, and recently by our President.
In several of the latest programs described below, the FED will buy Bonds, Bills, and Notes back from the private purchaser banks and other financial institutions, thus pumping money into the economy through giant corporations. Our readers will find more about the Fed’s criminal, legalized counterfeiting activities, that should indeed be financial crimes. Why crimes? Because newly printed money drives up prices, and we consumers will ultimately have to pay more for all we buy, while major corporations get most of the newly created funds! Why does Reuters not explain this to us?
We quote the following from Reuters: (March 31, 2020) – “The Federal Reserve has moved into overdrive to try to keep the U.S. economy from suffering lasting damage from the Coronavirus pandemic, announcing an emergency interest rate cut on March 3 and rolling out new efforts almost weekly since, including slashing rates to zero and relaunching large-scale asset purchases.”
“Its stockpile of assets will grow much larger under the litany of programs it has launched, although some will be held in what is known as special-purpose vehicles, or SPVs, rather than directly by the central bank.”
“Here’s a look at some of the steps taken by the Fed so far, reporting by Jonnelle Marte; Editing by Dan Burns and Andrea Ricci.”
** RATE CUTS
The Fed cut rates twice on an emergency basis this month, the first time it has done that since the financial crisis in 2008. The first cut of a half percentage point was on March 3 and the second of a full point was on March 15, which brought the Fed’s overnight borrowing rate for banks back to near zero. The reduction is meant to keep down the cost of loans for banks – and by extension their customers – to ensure borrowers have ample access to credit during the crisis.
** QUANTITATIVE EASING (QE)
The Fed first employed QE in the financial crisis, starting in 2008. The idea is that through large-scale purchases of various types of bonds – mostly Treasuries and mortgage-backed securities – it helps ensure that longer-term interest rates like those for mortgages and car loans remain low and help keep major purchases affordable for consumers and businesses. When it cut rates back to near zero on March 15, the Fed restarted these large-scale purchases and is now doing so with an open-ended commitment.
** DISCOUNT WINDOW
Banks in recent weeks have borrowed the most since 2009 from the Fed’s lending tool of last resort at the urging of the central bank. The so-called “discount window” is rarely used because banks are worried that using it could make them appear weak. But policymakers have lowered the rate charged on the funding to 0.25% and extended the length of the loans offered from one day to 90 days. As of last Wednesday, banks had borrowed more than $50 billion.
** CENTRAL BANK FOREIGN CURRENCY SWAP LINES
The Fed has standing agreements with five other major foreign central banks – the Bank of Canada, European Central Bank, Bank of England, Bank of Japan and Swiss National Bank – that allows them to provide U.S. dollars to their financial institutions during times of stress. The Fed has increased the frequency of the operations to daily from weekly. It also offered temporary swap lines here to nine additional countries to ease access to dollars, which are in high demand because the liabilities of many foreign governments and companies are denominated in the U.S. currency.
** TERM ASSET-BACKED SECURITIES LOAN FACILITY (TALF here)
Through an SPV, the TALF program will buy bundles of assets secured by auto loans, credit cards, student loans, loans backed by the Small Business Administration, and other types of credit. Its aim is to make sure banks and other lenders such as auto finance companies have ample cash to keep making loans to consumers and businesses during the crisis.
** COMMERCIAL PAPER FUNDING FACILITY (CPFF here)
The Fed reintroduced the CPFF, a tool it used during the last financial crisis, to get money directly into the hands of large businesses, which are major employers. Like the TALF, it will use an SPV to make purchases of commercial paper, an essential source of short-term funding for many companies. The market had come under strain amid worries that companies hit by efforts to slow the spread of the coronavirus would not be able to repay their IOUs.
** PRIMARY DEALER CREDIT FACILITY (PDCF here)
Through this facility, the Fed offers short-term loans to the two dozen Wall Street firms authorized to transact directly with the central bank. The program offers to fund of up to 90 days to primary dealers. A similar program run from 2008 to 2010 only offered overnight loans.
** PRIMARY MARKET CORPORATE CREDIT FACILITY (PMCCF here)
With this program, the Fed will act as a backstop for corporate debt issued by highly rated companies. Through an SPV, the PMCCF will buy bonds and issue loans to companies that can help them cover business expenses and stay in operation. The debt must be repaid to the PMCCF within four years.
** SECONDARY MARKET CORPORATE CREDIT FACILITY (SMCCF here)
** MONEY MARKET MUTUAL FUND LIQUIDITY FACILITY (MMFLF here)
This new facility is meant to keep the $3.8 trillion money market mutual fund industry functioning even when investors are withdrawing money at a fast clip. The tool offers loans of up to one year to financial institutions that pledge as collateral high-quality assets like U.S. Treasury bonds that they have purchased from money market mutual funds. The Fed indirectly encourages banks to buy assets from money market funds, reducing the odds that the funds will need to sell those assets at a loss to meet redemptions. Our Standards: The Thomson Reuters Trust Principles.-End of Reuters
WHTT’s Chuck Carlson returns:
There you have it thanks to Reuters, a list of new and old alphabet soup agencies, all controlled by the FED, each having a hand in the electronic creation of money, without the permission of Congress. The FED will now buy assets from them! This act would once have been a violation of our Constitution, and may still be. It holds that only Congress has the power to coin money and “regulate the value thereof.” The FED simply creates the money to purchase all the above-revealed assets from private interests with money it creates! For many articles about how the FED does it, search for “FED” or “Our Money” on this website.
Unfortunately, you will not find a complete explanation of the power of those who control the FED in anything Reuters publishes. However, WHTT thanks Reuters for a not so small favor as this weak cover-up of the facts!
The best explanation of the workings of The Federal Reserve System can be read, free, in Eustace Mullins’s book “Secrets of the Federal Reserve” in a pdf file.
