REVEALED: The Fed’s Next Trick
Today we lower our ear to the rail… and report the approach of a rumbling locomotive.
Free and honest markets are roped to the tracks, squirming, writhing, sobbing.
This iron horse is barreling toward them. Mr. Jerome Powell is at the controls…
And murder is on his mind.
What is the Federal Reserve’s latest plot against the remains of free and honest markets?
And will it pull off the caper?
Answers anon.
We first look in on the seemingly condemned — squirming, writhing, sobbing on the tracks…
A Quiet Day on Wall Street
The day counted plus and minus.
The Dow Jones lost 39 points. The S&P scratched out a 1.85-point gain today. The Nasdaq, meantime, took the ribbon with a 32-point advance.
A dull affair altogether. Yet tomorrow may bring high adventure of course.
And so we now return to today’s central question:
What is the Federal Reserve’s latest plot against the remains of free and honest markets?
Let us first flip back the calendar to the war year of 1942… where our tale begins.
How the Fed Fought WWII
Wars are costly enterprises. And taxes alone would not purchase the arsenals of democracy.
Uncle Samuel therefore held his cap before the bond market… and went upon the borrow.
But the authorities were hot to keep borrowing costs within reasonable limits.
The Federal Reserve and the Treasury Department therefore signed onto an agreement:
The Federal Reserve would place a cap on the government’s borrowing costs.
This it accomplished by purchasing any government bond with yields above a predetermined level.
These purchases shrunk the yield (purchasing Treasuries hammers down the yield; selling Treasuries ratchets yields higher).
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