Financial Crisis 2020 Day #10: Fed Firing Bazookas Indiscriminately in All Directions


The US Federal Reserve Bank, ostensibly not affiliated with the US Government, has now become the US Government’s only active agent in the fight against the financial fallout from the Coronavirus Pandemic that has now engulfed the whole world.

Non-investment-grade Corporate Bond rates have now broken through the critical 3.8% level that catalyzed the implosion of Lehman Brothers.

The Fed stepped in this week and bought $250 billion worth of bonds in 5 days. The have now blown through half the budget they announced for such purchases this week, and still the markets crumble.

With the Fed having now committed to actions that will see its balance sheet swell to over $8 trillion in the next month, we have entered a new reality where the government and everybody else believes the solution to any problem is to fabricate more capital our of thin air, and drop it by the helicopter-load into the banking system.

But the only problem this time, as opposed to 2008, is that everyone now knows that the only lasting effect of the massive money counterfeiting that the was called Quantitative Easing from 2009 to 2018 is that it created false valuations in the companies traded on US stock markets, and empowered the entire government machine to broadcast positive economic sentiment to a overwhelmed world.

Not only that, but the participants in the giant Scam of the Century, as I prefer to think of Quantitative Easing, is that even the accomplices we call banks have broken ranks with the Fed and other central banks. They have learned that the Fed and central bankers around the world are “headline averse”, meaning they dread negative headlines blaming them for the economy’s woes.

So the banks now know that, all they have to do to get the Fed to print more money is keep the money they Fed already gave them instead of lending it out to the lesser institutions to whom they are supposed to provide money.

All these metaphorical dumptrucks are backed up to the Fed’s loading dock, and once full, they drive off into the countryside to be stashed in private vaults and counted incessantly by their owners.

Meanwhile, America starves, and crumbles, and fights over the scraps that fall off of this elite financial table at which none of us have a seat. Even their dogs are better fed than us.

This is the truth that the Coronavirus Outbreak is incrementally revealing. This is the reality that threatens to tear apart the very fabric of society, if the charade continues.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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