Dear Professor Kaufman,
I am thinking of moving ASAP to Georgia to vote for 2 senators before the legal deadline.
I get the impression that Biden is trying to steal the election.
Using negro democrats in Atlanta, Detroit, Milwaukee, Philadelphia,…
Dumped in piles of fake mail-in ballots.
China is behind election theft, race riots, antifa, blm, impeachment,….
I do not trust any election statistics,
or economic statistics.
China was 3rd world 40 years ago.
Now is rich.
Where did they get the money?
Somehow stolen from USA.
Now USA is poor,
and being taken over by hostile foreign powers.
If Biden does get in,
look out for some huge changes.
You are right.
The absorption of these junk bonds into the Fed's portfolio is nothing more than an excuse to print money.
They know damned well that if the tent folds, it will be a disaster.
They are doing it to postpone any economic collapse
by providing liquidity into an already failed system to keep it going.
Giving everybody money simply increases the V velocity for a length of time.
The hope is that keeping things from collapsing will provide time for It to run on its own,
which may, or may not work.
My bet is that the Fed is not providing stimulus for the economy,
but an outright crapshoot for a recovery of some kind.
If it doesn't work, they will be out of office in two years.
If it does, they can take credit for another recovery.
My bet – we may be headed for depression.
interest rates will have to go up in a year or so
as the public demands more and more money to keep the unemployed happy.
Fiscal policy will lead to socialism
(follow the Columbia and Argentina models) as unemployment skyrockets.
I do believe we are in for some changes.
Dear Professor Kaufman,
I am social distancing to avoid the virus.
Californians already have herd immunity, got the virus months ago and did not know it.
We have China communist students around here so I may have already got the virus too.
The virus is mild and most cases are asymptomatic.
It appears Negroes get diseased the most because their black skin does not allow sun to make enough Vitamin D.
East coast big city people spend winter indoors so complete lack of sun Vitamin D,
and blow germs all over each other while indoors.
Lots of communicable diseases can be avoided by just staying away from people and practicing cleanliness.
Seems to me the family farm may make a comeback.
Live far from diseased big cities.
Self-sufficient food, water, quiet.
Amish families around here average 7 children per family and use horses, mules,…
no cars or electronics!
It can be done.
Also city dwellers need home delivery of milk, eggs, bread, ….
Home delivery was common 60 years ago,
Bypass stores all together,
easy on dairymen and consumers ….
avoid getting diseases in the stores.
Shocking moves by the Federal Reserve.
Trillions to buy junk bonds, debt from possibly bankrupt companies?
Where is the accountability?
Which companies should be bailed out?
Why allow some to fail while others get their debt bailed out?
This is in addition to $Trillions of Federal Debt so the Treasury can send out checks to some people and companies but not others.
With so much money being pumped into the economy then it looks like hyperinflation may spread.
Already New York City and San Francisco rents are way too high, before the crash.
Looks like a catastrophe!
Fed , expands its shopping list to include junk bonds
• The Fed vastly expanded its efforts to save the economy with $2.3 trillion in programs aimed at helping businesses and state and local governments.
• The announcement sparked a jump in stocks, drop in the dollar, sell-off in bonds and a rally in gold.
• The Fed announcement included some surprises, including its purchase of junk bond ETFs.
The Federal Reserve dramatically expanded its efforts to save the economy,
even adding junk bonds to the list of assets it can buy,
as a wave of businesses are anticipated to have trouble surviving the expected recession.
Treasury yields rose and
the dollar sagged
after the Fed said it would would provide $2.3 trillion
in programs that expand its operations to reach small and midsized businesses and U.S. cities and states.
Gold futures surged on the view that the Fed initiatives could be inflationary.
The Fed provided details of some programs it had already announced, but added some new ones and some surprises.
Fed Chairman said after the announcement that the Fed was aiming its efforts at the part of the real economy that need the most help and that other programs could be added.
the Fed expanded its corporate lending programs to take it into an entirely new area,
including ETFs of companies that are rated below investment grade.
It had previously announced a program to buy investment-grade corporate debt and ETFs.
It also will now accept
triple-A-rated commercial mortgage-backed securities and collateralized loan obligations as part of its Term Asset-Backed Securities Lending Facility, first created in the financial crisis.
The Fed provided details on its Main Street business lending program,
setting a target of $600 billion
in loans for midsized businesses.
It also said it would provide term finance to banks involved in the Payroll Protection Program, authorized by Congress to help small businesses.
The Fed also said it would create a new Municipal Liquidity Facility that will offer states and municipalities up to $500 billion in lending,
and it will be backstopped with $35 billion from the Treasury to protect it from potential losses.
"Now outside of buying stocks, every asset class is open for the Fed to buy,"
. "They're worried about credit.
They consider themselves a lender of last resort.
They're now the lender of all resorts.
Going below investment grade into the high-yield junk area is now a dangerous area they're headed to, but that'll be a discussion or another day."
Boockvar doesn't believe the Fed will buy stocks,
though there has been plenty of market speculation recently that it could.
The Fed said most of the ETFs it will buy
"will be of ETFs whose primary investment objective is exposure to U.S. investment-grade corporate bonds,
and the remainder will be in ETFs whose primary investment objective is exposure to U.S. high-yield corporate bonds."
"I thought they would do it if things turned down again.
They keep doing things day after day, it makes you wonder how bad the data is they're seeing,"
The economy is already expected to be in a recession,
after several weeks of state shutdowns,
now impacting about 90% of the U.S. economy.
Economists expect the current quarter to be the worst with estimates of a record 30% decline in GDP.
The economy is expected to start to pick up in the third quarter,
once the economy reopens.
"The Main Street stuff looks good.
I just didn't think they'd venture into junk bond ETFs.
It's just going to be who's next to complain,"
"They're not going to buy investment-grade bank paper.
I think it's interesting they're buying junk bonds.
How do you price risk going forward, they'll take anything?"
Targeting high-yield debt may especially help energy companies,
many of which are rated junk and are struggling with the oil price collapse.
The Fed has been aggressive, adding massive amounts of liquidity to the market,
slashing interest rates to zero
and committing to an unlimited amount of Treasury purchases.
Congress has authorized a $2.2 trillion aid package and is discussing expanding it.
As the Fed has acted, it has helped bring down spreads in some stressed parts of the credit markets.
It has also added liquidity in a variety of asset classes, including commercial paper which was virtually frozen.
"We acted forcefully to get our markets working again," said Powell,
adding the efforts have improved market conditions.
The Treasury has backstopped the Fed, including $85 billion in protection for three Fed credit facilities that target $850 billion.
"It's been an on and off monetary policy,
fiscal policy partnership which I think has accomplished a lot,"
"The problem on the fiscal side is the political angle and politicians just can't help themselves…
they overcame it with the first stimulus bill.
Eventually, they'll overcome it with this stimulus bill. In the interim,
the economy needs help and the Fed is stepping into the void. "
The Fed clearly made progress in the corporate debt market,
which had been illiquid until the central bank announced its program to buy corporate debt last month.
That not only opened up the market and narrowed spreads,
but it unleashed a record wave of new debt issuance as companies seek cash to get through the crisis.
The high-yield market has also improved,
and there have been a number of new issues in that market in the past week
The Fed's effective backstopping of the entire U.S. economy, loaning money to Main Street,
large and small businesses and state and municipal governments,
will help provide and, even replenish, capital
to a cash-starved business community recently threatened with broad insolvency.