Fed to Buy Unlimited Government Debt and Lend to Businesses

By Associated Press – Re-Blogged From Headline Wealth

In its boldest effort to protect the U.S. economy from the coronavirus, the Federal Reserve says it will buy as much government debt as it deems necessary and will also begin lending to small and large businesses and local governments to help them weather the crisis.

The Fed’s announcement Monday removes any dollar limits from its plans to support the flow of credit through an economy that has been ravaged by the viral outbreak. The central bank’s all-out effort has now gone beyond even the extraordinary drive it made to rescue the economy from the 2008 financial crisis.

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Fed Panics Over Coronavirus

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Yesterday, the Fed cut interest rates by 50 basis points. Not during a regular monetary policy meeting, but in a surprising move. But what are the implications for the gold market specifically?

Fed Cuts Interest Rates in Emergency Move

Last week, I wrote that the spread of the new coronavirus to Europe and the inversion of the yield curve make “the Fed more likely to step in and cut the federal funds rate, you know, “just in case”. And in yesterday’s surprise move, the Federal Reserve cut the federal funds rate by 50 basis points in response to the coronavirus threat. The decision was unanimous and it was communicated in the FOMC statement, as follows:

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Stock Market Overmedicated on FedMed, Patient Goes into Cardiac Arrest

By David Haggith – Re-Blogged From Silver Phoenix

The Federal Reserve on Tuesday gave the market a double-dose of exactly what it thought the market needed, and the market just about died! On the theory that, if a little is good, more is better, the Fed gave a double cut of interest. It did not go as planned.

At first, the medicine hit like nitroglycerin tablets, and the patient’s heart leaped. You can see how instantly the patient bolted up on the operating table in the graph, but the double dose the Fed administered was too much, and by the end of the day the patient’s vital signs were down 785 points.

Simultaneously, bond yields busted through a major psychological barrier with the 10-year yield going deep into a coma below the 1% near-death zone to rest at 0.97%!

The Crisis Will Sink Stocks

By Egon von Greyerz – Re-Blogged From Gold Eagle

There are no safe assets. In 2002 we recommended our investors to hold up to 50% of their financial assets in physical gold. Today in 2020, I consider that up to 100% is the right figure since there are no safe assets except for physical precious metals.

We are now at the end of the only truly global asset bubble in history, fuelled by a debt explosion of epic proportions. Never before have all major economies peaked together, powered by quadrillions of credit creation, money printing and derivatives.

UBER-OPTIMISTIC INVESTORS WILL BE SHOCKED

Although the magnitude of this bull market is greater than anything seen before, the psychology of the current market is similar to previous speculative bubbles whether we take 1929, 1973, 1987, 1999 or 2007. At the stock market peak of these periods, psychology reached uber-optimism. In 1929 for example, the Yale economist Irving Fisher stated in the New York Times: “Stock prices have reached what looks like a permanently high plateau”. Three years later the Dow had lost 90%.

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Does Wall Street Now Have A Powell Put

By Michael Pento – Re-Blogged From Pento Portfolio Strategies

First let’s explain exactly what a “Fed Put” is. A Fed put is defined as: The confidence of Wall Street that the Fed will lower interest rates and print money to support the market until economic strength will be strong enough to carry stocks higher. The term “Put” is ascribed to this because a put option is basically a contract that offers a buyer protection from falling asset prices. It was first coined under the Chairmanship of Alan Greenspan when he lowered interest rates and printed money to rescue Wall Street from its 22% Black Monday crash back in 1987. The practice of bailing out stocks was institutionalized by Ben Bernanke; and then became a bonafide tradition perpetuated by Janet Yellen.

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Macroeconomics Has Lost Its Way

By Alasdair Macleod – Re-Blogged From Silver Phoenix

The father of modern macroeconomics was Keynes. Before Keynes there were macro considerations, which were firmly grounded in human action, the personal preferences and choices exercised by individuals in the context of their own earnings and profits. In order to give a role to the state, Keynes had to get away from human action and devise a positive management role for central planners. This was the unstated purpose behind his General Theory of Employment, Interest and Money.

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Emerging Market Crisis Spreads To The Core, Central Banks Face Catch-22

By John Rubino – Re-Blogged From Dollar Collapse

One of the things giving “data-driven” central banks wiggle room on their pledge to tighten monetary policy is the fact there are several definitions of inflation. In the US the thing most people think of as inflation is the consumer price index, or CPI, which is now running comfortably above the Fed’s target. But the Fed prefers the personal consumption expenditures (PCE) price index, which tends to paint a less inflationary picture. And within the PCE universe, core PCE, which strips out energy and food, is the data series that actually motivates Fed action.

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