End of The Fed?

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End of The Fed?

Mar 27, 2020 | 19:38 1 This article argues that basically with this recent bailout, the treasury has absorbed the federal reserve and is the owner of this distressed debt and assets this time, fed becomes basically a banking arm. Someone on CNBC called the union of the fed and treasury as a new construct basically the Bank of Uncle Sam now controlled by Trump basically.

maybe Errol or Austrian have a view point.

The Fed's Cure Risks Being Worse Than the Disease Reply With Quote

  • Mar 27, 2020 | 20:02 2
    Quote Originally Posted by jazz View Post
    This article argues that basically with this recent bailout, the treasury has absorbed the federal reserve and is the owner of this distressed debt and assets this time, fed becomes basically a banking arm. Someone on CNBC called the union of the fed and treasury as a new construct basically the Bank of Uncle Sam now controlled by Trump basically.

    maybe Errol or Austrian have a view point.

    The Fed's Cure Risks Being Worse Than the Disease
    Financial incest. One arm of government borrows from the other. The treasury floats a bond and the central bank buys it directly. Prior to the crisis, they used intermediaries; from now on they will just do it openly. Almost no one will object.

    This is no different from an individual who puts a jar of their own money on the counter. When they take some money out of the jar, they stick an IOU in it. If you don't replace the IOUs with actual money, eventually you are left with a jar of IOUs. A Keynesian would tell you that you are stimulating demand. In reality, the IOUs are worthless. You have merely consumed your savings.

    The government of Manitoba is now pleading with the federal government for an emergency credit facility. I would guess that they approached the capital markets and found no one willing to lend them a dime unless at very high rates of interest. When the federal government, or more likely the central bank, has to buy your bonds, you are insolvent. Bankrupt. Reply With Quote
    biglentil's Avatar Mar 27, 2020 | 20:55 3 You ever played a game of monopoly and a few players are gifted money by the banker to keep the game going. Well the only difference I see is the colour paper. Reply With Quote

  • Mar 28, 2020 | 02:17 4
    Quote Originally Posted by biglentil View Post
    You ever played a game of monopoly and a few players are gifted money by the banker to keep the game going. Well the only difference I see is the colour paper.
    Interesting biglentil;
    The monopoly game still keeps on...going... just the rules change! If the players keep playing... the game keeps going!!!

    PS; Corvi-19 economic simulation using monopoly!!! What an interesting evening family project! Over Skype? Grin! That could really get twisted!!! Reply With Quote