Fed Heading At Warp Speed Toward A Monetary Brick Wall

What commenced with Alan Greenspan’s market-supporting assurances of liquidity and asymmetric rate policy this week took a dreadful turn for the worse: Open-end QE, PMCCF, SMCCF, MMLF, CPFF, MSBLP, TALF...They’re going to run short of acronyms.

Our central bank has taken the plunge into buying corporate bond ETFs, with equities ETFs surely not far behind. The Fed’s balance sheet expanded $586 billion – in a single week ($1.1 trillion in four weeks!) – to a record $5.25 trillion. Talk has the Fed’s new “Main Street Business Lending Program” leveraging $400 billion of (this week’s $2.2 trillion) fiscal stimulus into a $4.0 trillion lending operation.

Having years set back unwaveringly, the ride down the slippery slope of inflationism has reached warp speed, careening blindly toward a brick wall.

Disclosure: None.

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Gary Anderson 1 year ago Contributor's comment

The Fed has plenty of room to do Helicopter Money. If the virus lockdown goes too far, that would be a smart move. The problem with not using the Fed is that there is little else to even the playing field for main street in the age of financialization.