In a mid-day announcement, the New York Fed said it will conduct a $500 billion repo operation this afternoon, another move targeted at keeping money flowing through the system. Repo involves banks putting up high-quality collateral like Treasurys in exchange for the liquidity they need to conduct operations.
Monday’s move comes after the Fed stepped up the operations last week, offering up to $1.5 trillion to an industry hungry for the Fed’s offerings. Read More …
Opinion: I posted this yesterday afternoon in Today’s Headlines and the thought came to me later in the evening that I better keep track of the stimulus money in case Jimmy DeYoung has me on the Prophecy Today Saturday broadcast this week.
Last Saturday Jimmy asked me, “Can the stock market recover?”
On Friday, the Dow Jones average of 30 stocks spared 2100 points in what was one of the biggest up days in history. So at the time it looked as though the market had put in a short term bottom.
Here was my answer:
“On Thursday, the Federal Reserve pumped 1.5 trillion of new money into the market which is similar to what they did in 2008, 10 and 12. That newly printed money lifted the market back then and on Friday, but it also added to our ever-growing mountain of debt.
What is concerning, Jimmy, is that the market should bail itself out with solid earnings of great US companies rather than the Federal Reserve bailing it out with newly printed money that debases existing dollars.
Friday afternoon President Trump declared a national emergency that will provide $50 billion in relief to agencies that need support and cut red tape for agencies to move quickly to help people who are sick with the virus”.
What I didn’t know then was that virus news would continue to grow worse and worse into Sunday, and that President Trump would announce that the Federal Reserve would make an unscheduled $700 billion QE, meaning they would create the money and inject it into the system. QE5 is now under way following ‘not” QE4.
You see, the 1.5 trillion (+ or -) the Fed added in late 2019 was done in a stealth manner, so that it got the nickname ‘not QE’.
On Monday, a spooked market dropped 7% on the opening, triggering a 15 minute circuit breaker and by the end of trading it shed almost 3000 points or 13% on the worst point drop ever in one day.
Stimulus Recap by my count:
- 2019 – $1.5 trillion not QE4
- 2020 – $1.5 trillion repo stimulus
- 2020 – $700 billion QE5
- Monday – $500 billion repo stimulus
(repo is short term borrowing)
Now if we add $4.2 trillion to the $4 trillion that was never paid back from QE1, QE2 and QE3 we now have $8.2 trillion on the Fed’s books that will have to be paid back some day.
And that by the way is not included in the 23 trillion national debt and $150 trillion unfunded liabilities (Social Security/Medicare/Medicaid), or $2 trillion in student loan debt that Bernie wants to wipe off the books.
Now if that is not enough, take a seat: The US is still by far the strongest economy in the world.