Fed is in the business of purchasing (indirectly) equities

by Xayde26

I’m sure, at this point, you’re familiar w/ the term Quantitative Easing and what it means.

The Fed, as of last night, reopened the Primary Dealer Credit Facility. This facility takes in commercial paper and other interest rate related products and in exchange issues loans (now at a zero rate). Except they added one extra thing… very quietly…

www.federalreserve.gov/newsevents/pressreleases/files/monetary20200317b1.pdf

The Fed is prohibited from purchasing securities in the market.

However, that pdf is the 2020 release laying out the groundwork for the PDCF’s rules and guidelines.

They added EQUITIES to the list of things they can accept as collateral in exchange for issuing zero interest loans to companies. They backdoored their way into propping up the stock markets by being able to acquire stocks indirectly.

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Which means Starbucks, who started share buybacks up again today, can turn around and give the shares they bought back to the Fed, and receive a zero interest loan from the Fed.

This is massive. This was NOT a part of the PDCF’s abilities in 2008. Basically, the PPT has found out how to go mainstream. It will take a bit for this to work it’s way into the system but it is out there.