April 1, 2023

The Giant Money Spigot

The mainstream media is so concerned about Trump and the impending impeachment process that the Fed continues to send $690 billion a week to Wall Street. Either the media and the Federal Reserve are working together to keep this information from getting out to the general public, they are too focused on Trump and international affairs, or they could just be too blind to see what’s really going on with the economy.

Securities trading firms on Wall Street currently receive $120 billion in daily loans from the New York Fed. Prior to that, they were only lending $75 billion per day. However, they have increased it by $45 billion per day as of October 24 this year. And, unless they are forced to stop or the US economy as a whole collapses, will continue to lend these Securities firms that amount each day.

It is fascinating to observe that these Wall Street companies are continually receiving rolled-over loans. Thus, in essence, they are loans that last forever. Ironically, this was exactly what transpired during the Financial Crisis that lasted from 2007 to 2010. At the time, “let’s call them what they actually are Wall Street Casinos” were Wall Street firms that received individual loans totaling more than $2 trillion and were rolled over for two and a half years. These loans are made today without Congress or the American public’s permission or even knowledge, as they were in 2007. Citicorp, a bank, received Fed loans totaling over $2.5 trillion with interest rates below 1%. This at a time when it was bankrupt and unable to obtain loans from the public market.

The Federal Reserve announced on October 11 that it would begin a program to buy up to $60 billion worth of US Treasury bills each month for the next year and a half. This latest information follows that announcement. All that matters is this: The New York Fed’s actions are unprecedented in American history. However, this is not mentioned on any newspaper’s front page. In fact, there has been no public announcement of a crisis on Wall Street. Congress has not held a single hearing to discuss these massive loans or Treasury buybacks. These loans have not been authorized by any elected official. Even though no officially elected official has been contacted or authorized by the Fed, the New York Fed is still employing highly dubious strategies that could be considered illegal today, just as it was doing in 2007.

The fact that these loans are not being offered to commercial banks, which could re-loan the money to boost the US economy, is another major concern. In point of fact, these loans are going to the primary dealers of the New York Fed, which are Wall Street stock and bond trading firms that also count hedge funds among their largest borrowers. Foreign banks have branches in many of the primary dealers. These loans are issued by the Fed at interest rates of 2%. The interest rates these businesses receive point to yet another significant issue. The Fed is playing favorites and has no interest in boosting the US economy in the slightest. Interest rates offered to these managers of hedge funds are significantly lower than those offered by the open market.

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