Stimulus bill includes provision essentially merging the Fed and Treasury into one organization
Kelen McBreen | Infowars.com – MARCH 28, 2020
President Trump could be pulling off a major move that has the potential to save America and its economy as the nation faces one of its most difficult periods in recent history.
In the face of the COVID-19 pandemic and all of the health, economic and societal fears that come with it, President Trump might come out of the chaotic situation a hero.
A Bloomberg opinion article and written by Jim Bianco explains how “the federal government is nationalizing large swaths of the financial markets.”
“The Fed is providing the money to do it,” the author states. “This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.”
How could this happen?
Essentially, the Federal Reserve has created multiple new programs lately that serve a slew of purposes.
Bianco lists the following programs and their intended functions:
CPFF (Commercial Paper Funding Facility) – buying commercial paper from the issuer. PMCCF (Primary Market Corporate Credit Facility) – buying corporate bonds from the issuer. TALF (Term Asset-Backed Securities Loan Facility) – funding backstop for asset-backed securities. SMCCF (Secondary Market Corporate Credit Facility) – buying corporate bonds and bond ETFs in the secondary market. MSBLP (Main Street Business Lending Program) – Details are to come, but it will lend to eligible small and medium-size businesses, complementing efforts by the Small Business Association.
“The Fed isn’t allowed to do any of this,” he continues. “The central bank is only allowed to purchase or lend against securities that have government guarantee. This includes Treasury securities, agency mortgage-backed securities and the debt issued by Fannie Mae and Freddie Mac. An argument can be made that can also include municipal securities, but nothing in the laundry list above.”
So if the Fed “isn’t allowed” to conduct the above-mentioned operations, how is any of this happening?
Each acronym program listed will be connected to a special purpose vehicle (SPV) financed by the Fed.
Next, the Treasury will make an equity investment in each SPV, meaning they, not the Fed, purchase the securities and backstopping of loans and the Fed is acting as a bank providing financing.
“The Fed hired BlackRock Inc. to purchase these securities and handle the administration of the SPVs on behalf of the owner, the Treasury,” Bianco writes.
“In effect,” he says, “The Fed is giving the Treasury access to its printing press.”
This is revolutionary because America’s Founding Fathers granted the power to print coin to Congress and Congress only.
Article 1l Sect 8 permits Congress to coin money and to regulate its value and Section 10 denies states the right to coin their own money.
Article I, Section 8, Clause 5 specifically grants Congress power to “coin Money, regulate the Value thereof, and of foreign Coin.”
Therefore, the framers clearly wanted the national monetary system to rest in the hands of America, not a private consortium of foreign banks, AKA the Federal Reserve.
This move appears to undo, at least partially, what former President Woodrow Wilson did in 1913, which was surrender Congress’ money-regulating powers to the privately-owned Federal Reserve.
Has Trump managed to take back control of America’s currency amid the greatest U.S. crisis since 9/11?
Saturday, 21 March 2020 16:29 Brandon Smith
This article was written by Brandon Smith and originally published at Birch Gold Group
Last November, in an article titled ‘The Economic Crash So Far: A Look At The Real Numbers’, I outlined the reality of statistical fraud by governments and central banks to hide the ongoing economic downturn. The Everything Bubble, perhaps the biggest debt fueled bubble in history, has been propping up the global economy for several years, but began to waver dramatically at the end of 2018, as the Federal Reserve tightened liquidity conditions into economic weakness (just as they did in 1929 and in the early 1930’s as the Great Depression took hold).
In that article, I warned:
“If the global economy is not on the verge of collapse, then why did central banks keep propping it up for the past ten years? And if central banks have been propping up the system, how much longer do you think they can do this? How much longer do you think they want to do it? What if one day they decide to let the entire house of cards tumble? What if such an event actually benefits them?”
An important factor to this discussion is the idea that the central banks are “ignorant” to the damage they do. This claim is everywhere in the alternative media these days, and it is simply wrong. The banking elites are well aware of the damage they do, and often it benefits their bigger agenda of one world centralization. In fact, Jerome Powell openly admitted in the minutes of the October 2012 Fed meeting exactly what would happen if the Fed took actions to tighten cash flows while markets were addicted to stimulus. Then, as soon as he became the head of the central bank, he implemented that exact policy.
Almost nothing in finance and economics happens without being “managed”, or at least deliberately triggered by central banks. Economic crisis events are a form of massive leverage against the public. They are designed to siphon tangible wealth for pennies on the dollar from the middle class while also setting up social crisis conditions which allow the elites to manipulate the population into accepting less freedom and more globalism.
In the past, I have noted that the central banks have clearly been waiting for something or stalling the crash in preparation for a specific window of time. They needed an event that could be used as cover for the crash that they had been engineering. This event could come in many forms: The trade war was a perfect start, along with war tensions with Iran, but there was really no way of telling what the trigger would be. Well, now we know.
The COVID-19 pandemic is a perfect cover event. It is a virus with a strangely long incubation period coupled with being highly transmissible and just deadly enough (3% to 5% death rate) to cause fear within the population. This novel virus is not going to go away for a while; it will most likely stick to the global populace like glue for the rest of the year, and like the Spanish Flu which was active for around two years, the longer it circulates the more deaths accumulate.
But the virus is not the cause of the economic collapse; it is only a prime scapegoat, along with the very slow response times of many governments and the World Health Organization to encourage a shutdown in international travel from hot zones, which allowed the virus to spread unhindered. The collapse was taking place before the pandemic ever became a factor.
We are seeing this clearly now in the Fed repo market situation, which has continued to escalate as corporate beggars demand more and more liquidity that the Fed is either not able or not willing to supply. And by liquidity, I’m talking about tens-of-trillions; I’m talking about TARP level or greater fiat injections. I’m talking about direct purchases of stocks and other assets beyond bonds. The investment world wants the Fed to make it rain cash, and while it seems like that is what the Fed is doing…they are not even close yet.
Of course, the next question is, Will it even matter if the Fed initiated full blown helicopter Weimar-style inflation? The answer is no. If the Fed wanted to stall the crash, they would have introduced such measures over the course of the last year. Instead, they did the bare minimum to make it look like they cared about saving markets, which they do not.
The Weimar model, which some financial analysts out there foolishly used as a reason for predicting an endless stock market rally to Dow 40,000 and beyond, does not work because it never worked for Weimar. German stocks still collapsed in 1924, and then again after 1927; there is no precedent in which hyperinflation ensured increased stock profits or higher prices for very long, so don’t expect helicopter money from the Federal Reserve to help either.
Anyone with any sense can see that the prevailing factor of stock market performance has long been corporate stock buybacks, which have now conveniently dropped off the face of the Earth as the COVID-19 pandemic spreads. If you want to know why Fed intervention is doing nothing to reverse the damages in equities, the end of stock buybacks are a good starting point, along with the vast debts among corporations and consumers.
The black hole of debt that has been looming over the global economy has been set in motion, creating a negative feedback loop that makes any intervention useless, beyond a complete “economic reset”, which is exactly what globalists have been wanting and planning for years.
In the meantime, there has been a flight to safety – but what assets are safe? On the surface it looks like almost everything except the U.S. dollar is plunging in value – but looks can be deceiving. As I noted earlier this month in ‘Physical Gold Will Soon Break Free From The Paper Market In Spectacular Fashion’, reports are coming in that purchases of precious metals have skyrocketed, and currently silver rounds are selling for as much as $6 to $10 over the spot price, while gold rounds are selling for at least $50 over spot. The physical market is officially decoupling from the paper market.
Coronavirus cover for mass arrests? Part II
COVID-19 is going to have a significant impact on the housing market. Global markets are facing significant volatility as we deal with the first major global pandemic that is hitting both developed and developing nations equally. This virus knows no borders and it is surprising how many people are still posting narrowly that this is somehow not going to impact the real estate market. They assume the Federal Reserve is going to have the power to generate demand out of thin air with low interest rates. But to who will you sell? This shock that we are experiencing is a global health crisis and entire nations are fully shutting down to save lives. The Fed has aggressively come out saying they will lower rates but low rates can’t help if you are out of a job or if the economy is shut down because the virus lingers longer than a week or two (by looking at China, South Korea, Italy, and Spain for example we are just starting to enter phase one). The hit to the financial system will be big and here in Los Angeles, the city is in essence slowly shutting down with schools closed, restaurants being limited in service, and grocery stores being cleaned out by panic. Yet somehow this is positive for housing?
The impact of COVID-19 on real estate
If you take a look at the Dow Jones US Real Estate Index the market has already taken a hit:
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This index looks to track the performance of REITs and other companies that directly invest in real estate. Some (not all) may remember vividly the financial crisis of 2007 to 2009. The stock market bottomed out in 2009 but real estate is a lagging indicator to stocks. The market right now is as volatile as I have seen it because major metro areas are shutting down completely. While some small locations have experienced these short-term shutdowns, for example locations near a hurricane that is approaching, we haven’t had something like this. Regarding low rates, we need to understand that during the financial crisis we also had low rates and extreme lending and it still ended up with a big correction because people still need to service debt. With this level of uncertainty right now, many people are not willing to make the biggest purchase of their lives.
Beyond the obvious volatility, people are dealing with a system that is shutting down but not because of a financial crisis. This is a health crisis and all areas are being impacted. Quality of life for the short-term is going to be significantly hit. People are working from home, schools are shutdown, many colleges have gone to strictly online courses to end the academic year. Many Millennials are barely scraping by so this shock from COVID-19 is going to have an impact but it really depends on how long this virus lingers.
Yet people are also realizing that even if you have money, if your local area doesn’t have food stocked, then you are not going to be able to acquire goods even if you have the money. We’ve come to depend on a reliable supply chain but something like this will force businesses to change and people will also remember that the order of things can change so quickly.
This week Los Angeles went from monitoring the status of COVID-19 to shutting down schools and implementing strict restrictions on restaurants, going out, and large gatherings. This is how quickly this is unfolding so open houses are not part of the prescription in social distancing.
People are still in a fog here in Los Angeles. They think it can never happen here or it is always different in this area. That is until it isn’t. This is a health crisis of global proportions. Italy just a few weeks ago was simply “monitoring” the virus to being fully shutdown with strict controls and a healthcare system in severe strain.
To think that “housing only goes up” and forget that real workers need to earn real money and stay healthy, we are in for a correction here. For now, the focus is on getting this thing under control.