Tuesday marked the official takeover of the bond market by the Federal Reserve (FED).
What that means “…In Plain English” is the FED began the un-precedented phase of shoring up the falling prices of investment grade corporate debt and Junk Bonds.
The New York FED selected Blackrock as the investment manager for, what is essentially a bailout facility…backstopped with taxpayer’s money.
Yes, you read that right.
Phase I of – what will eventually be – the FED’s multi-Trillion-dollar purchase of ETF’s has begun.
What makes this extremely sketchy is that Blackrock is one of the world’s largest purveyor of ETF’s.
Ironically (or NOT) the FED doesn’t see this as a conflict of interest.
I wonder if it has anything to do with the fact that FED chairman, Jerome Powell, has upwards of $11.6 Million invested with Blackrock?
There must be more to this.
Could it have something to do with the stimulus bill known as the CARES act?
Within the CARES act there’s $454 Billion of taxpayers’ money allocated to effectively bail out all of the New York Fed’s bad supervisory decisions since the 2008-2010 meltdown.
The $454 has been designated as “Loss Absorbing Capital” to soak up the first 10-25 percent of losses in the FED’s list of bailout facilities.
It gets better worse.
The newly created bond buying program allows Blackrock to leverage $75 Million at a rate of 10-1 creating $750 Million for them to bail out corporate bonds.
Remember, this is only Phase I.
Let’s do some math here.
Out of the $2.2 Trillion of the CARES act for the taxpaers, let’s assume everyone (kids included) got a $1,200 check…they didn’t, but let’s assume they did.
Conservatively, 300 Million people multiplied by $1,200 = 360,000,000,000. Subtract 360 Billion from the $2.2 Trillion package leaves you with $1.86 Trillion.
Where did it go?
If you back out the Fed’s $454 Billion that still leaves a remaining figure of $1.386 Billion.
Again, where did it go?
You see, the boyz in the “Club” have known for a long time that:
- The Global Bond Markets have been destroyed by negative interest rates.
- Global Pensions are beyond repair, unable to meet their obligations, and many will default in the near future.
- In order to keep everything from falling apart like a $2 suitcase, they need to print TRILLIONS more to keep the Ponzi scheme alive…all at the taxpayers’ expense.
These are only a few of the reasons we continue to say that 2020, The Year of Chaos will get crazier.
The $454 Billion dollar question is: How are you preparing to deal with what’s coming down the pike?
If you’re not sure, follow this link:
Federal reserve history tinfoil times