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How the Fed’s $1.5 Trillion “Gift” to Banks could Help Wage Earners
Helping those who need it most during the conronavirus lockdown
A financial advisor friend of mine sent this update to his clients last week:
“Yesterday, what got lost in the panic selling was the Federal Reserve’s announcement that $1.5T will be injected into the banking system…. this new money has to go somewhere…. 1) goods, 2) services and 3) assets. Do you think that over the next few months, we the people will consume more goods and services? Apparently not since we will all be hunkering down in our basements. The only place the new money can go is to purchase assets, meaning stocks, bonds, and real estate. The public health situation may get worse, possibly much worse, but the Fed has already primed the market for a comeback at some point…”
I wrote back to him: “What a relief to know that while the Adminstration’s response to the health crisis has been inept, and Congress is squabbling over a tax package, that our leaders have moved swiftly to protect what matters most — stock prices. Wow.”
He replied: “Haha Tim. After all, we are a proud capitalist country. Capital always comes first.”
But let’s not forget: Capital is actually controlled by capitalists — people who are business owners and investors. These people — the one…
