How Trump Will Take Over the Monetary Printing Press to Juice Markets for the Election

For all those in the alt-news world who rail against America's privately owned central bank, the Federal Reserve, with its power to print money without limit, here's an alternative that looks much worse: a President with the power to spend without limit and force the Fed to print the money to cover the cost. And that President is Donald J. Trump.

How has Trump acquired such power? As a reporter explains it, this outcome has been achieved through the creation of an:

alphabet soup of new programs that deserve special consideration, as they could have profound long-term consequences for the functioning of the Fed and the allocation of capital in financial markets. Specifically, these are: CPFF (Commercial Paper Funding Facility) – buying commercial paper from the issuer. PMCCF (Primary Market Corporate Credit Facility) – buying corporate bonds from the issuer. TALF (Term Asset-Backed Securities Loan Facility) – funding backstop for asset-backed securities. SMCCF (Secondary Market Corporate Credit Facility) – buying corporate bonds and bond ETFs in the secondary market. MSBLP (Main Street Business Lending Program) – Details are to come, but it will lend to eligible small and medium-size businesses, complementing efforts by the Small Business Association. To put it bluntly, the Fed isn’t allowed to do any of this. The central bank is only allowed to purchase or lend against securities that have government guarantee. This includes Treasury securities, agency mortgage-backed securities and the debt issued by Fannie Mae and Freddie Mac. An argument can be made that can also include municipal securities, but nothing in the laundry list above. So how can they do this? The Fed will finance a special purpose vehicle (SPV) for each acronym to conduct these operations. The Treasury, using the Exchange Stabilization Fund, will make an equity investment in each SPV and be in a “first loss” position. What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is acting as banker and providing financing. The Fed hired BlackRock Inc. to purchase these securities and handle the administration of the SPVs on behalf of the owner, the Treasury. In other words, the federal government is nationalizing large swaths of the financial markets. The Fed is providing the money to do it. BlackRock will be doing the trades. This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.

So Corona virus and global pandemic, mass unemployment and the Greatest Depression, even if the worst that could happen happens, Trump is now in a position to buy a stock market recovery by November 2020, which means that the US is surely headed for the biggest stock market manipulation in the history of fixed markets and financial rackets.

Central Banking Explained

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Don't worry: The US aint going broke til the Fed runs out of digits

Moody's place US on downgrade watch, warns the Drudge Report.

Moody's, that's the privately owned ratings agency that gave triple-A ratings to all those crap mortgage bonds.

In fact, Moody's are so useless, they even downgraded themselves.

LOL.

The truth about this and all financial news was revealed to me when I was a kid, and a friend, the son of the CEO of a well-known multinational corporation, explained to me that the only reason any sensible person attends a cocktail party is to hype stocks they intend to sell in the morning and trash stocks they want to buy in the morning.

That, chiefly, is the function of the financial news. Plus it fills the space between the ads on the business pages of the newspaper and creates market volatility, which drives up market volumes, which keeps the brokers in funds.

The truth about the US Government's credit status is that it cannot default on its debts as long as they are denominated in US dollars, because the US Government, with the collaboration of the Fed, prints its own money. That means US Government debt will always be redeemed at full face value, either with crisp newly printed US dollars, or with funds raised by rolling over the debt through the issue of new bonds.

But what about the "debt ceiling?"

In theory, Congress has the power to deny the US Government the freedom to print money, aka, quantitatively ease. But this they will never do, unless they wish to create a financial crisis, which will help fill the space between the ads on the business pages of the newspaper, and creates market volatility, which -- oh, but I said that before.

Of course there are folks who don't like to see the US print money, but so what?

The Chinese see that printing dollars lowers the value of those already printed, of which the Bank of China owns a trillion or more. But again, so what?

If the Chinese don't like seeing the value of their dollars depreciated, they know what to do: spend 'em now, which of course would be great for the US economy.

Let's see, how could America's foreign creditors, who own about four-and-a-half trillion dollars worth of Treasury debt instruments, spend their dollars?

I'd suggest the stock market. At current prices they could pick up America's top 20 corporations, including Exxon, Apple, Microsoft, Chevron, GE, IBM, Berkshire Hathaway, etc.

Or they might consider farm land. The US has about a billion acres, so at an average of $4500 per acre, America's foreign creditors could pick up the entire cultivable portion of the United States.

But they might prefer urban real estate, in which case they might pick-up all of the 14 million empty houses in the US (estimated value around $2 trillion), or some other component of America's $20 trillion worth of commercial and residential real estate.

A serious attempt by America's foreign creditors to do any of the above  would obviously have a variety of interesting repercussions.

With all that cash flowing into circulation, the US economy would experience an explosive boom.

Stocks would zoom: Dow 35,000 here we come.

Real estate would rebound. Crap mortgage bonds would soon be fully valued. Bail-out funds loaned by the Fed to banks would be repaid.

Inflation would roar as happy home-owners and stockholders once again enjoyed the wealth effect.

The dollar would fall, curbing imports, boosting exports.

Unemployment would fall. Government welfare expenditures would fall. Government revenues would rise. Deficits would be eliminated and the Fed would engage in repeated action to slow the boom.

Yes, as long as the US remains mired in the recession, raising the debt ceiling and printing more money is the only way to go. For those with US dollars, the best bet is to invest them in real assets (stocks, land, oil, etc.) or spend them now, which is good not only for those who spend but for the US economy too.