The Fed has bought billions of dollars of bonds from the richest companies in the world, not just America, so it’s Apple, Volkswagen, Toyota, etc.
In addition, they used almost 8 billion to purchase 16 corporate bonds ETFs, so the question is would it be smarter to take that money and make it available to Congress so they can help households and small businesses or perhaps just keep funding trillion-dollar businesses and lining the pockets of billionaire fund operators?
We’re talking about a lot of money – billions of dollars. Really the question is where should it be focused. In the midst of rising COVID-19 cases and more lockdowns, we’d pick small businesses.
There is a lot of pushback and criticism, but we think that Steve Mnuchin has said it best – it’s really simple the legislator made the rules, and Congress said that this is set to expire on December 31st.
So he’s just following the rules that were set in place. The Fed has about 500 billion at their disposal passed through by the Cares Act to lend out to big corporations and buy corporate bonds. And they also needed help during the pandemic, but as you rightfully pointed out, they’re doing just fine right now.
He’s not taking the money back. The money hasn’t even been used. It’s still sitting there over 400 billion at the Fed. The Secretary of the Treasury Mnuchin is saying that he wants to get that money to the American people in the form of direct payments or maybe in the form of other paycheck protection type loans, so Congress is better appropriated to get that out than the Fed right now.
This is something that Jay Powell himself says over and over again at the end of every form meeting, interview, or press release. He is saying we don’t really have the tools to fund households or small businesses directly. So it feels like he’s trying to have it both ways.
But here’s the thing, the media had to look at this in a different way, and we do find it odd that now the media is upset that money is being taken from the big business because president Trump was supposed to log big business. They’re saying that this whole move was supposedly made to weaken Joe Biden.
We’re not buying that argument. He’s just closing out the books. Again, Congress passed this saying that it would expire on December 31st, and you can argue you wouldn’t want it in the Democratic’s hands and for them to be able to control, but that’s not true.
They want a stimulus deal to be passed by Congress. Before the election, democrats, specifically, the House of Representatives speaker Pelosi was holding that up. They didn’t want any stimulus to be passed before the election, another Cares Act or Paycheck Protection Program.
And now that the election has happened, it would be in the best interest of the American people that hopefully, as a bipartisan effort, both democrats and republicans working together to get something passed. Because a lot of these programs, for example, the unemployment assistance and others, expires at the end of this year. So we desperately need something.
