The Fed Just Picked the “Big Guys” (Again) Over Individuals
In a recent disclosure to Congress, the Fed revealed that it just purchased $429 million in bonds from 86 corporations.
They did this through something called a Secondary Market Corporate Credit Facility (SMCCF). Buried on the Fed’s website, the press release explains the intention behind this purchase of bonds:
The SMCCF will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds. This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility’s minimum rating, maximum maturity, and other criteria.
According to Agora’s 5-Minute Forecast, the Fed also plans to purchase an additional $320 million of corporate bonds in the near future.
If you read the bolded phrase above from the Fed’s press release, you might think they intend to use this as an opportunity to help the “little guy” weather the recent economic storm.
But the “broad, diversified market index” that the Fed claims it’s rescuing doesn’t appear that broad… or that diversified.
The list includes giants like AT&T, Walgreens, Microsoft, Pfizer, Apple, Walmart, Comcast, Ford, Boeing, Cisco and Visa.
It goes without saying that these behemoths can weather out the storm while the smaller corporations struggle and lay off employees.
Fed Doing Its Best to Make Sure the “Big Guys” Keep Winning
The same edition of Agora’s 5-Minute Forecast sums up another example of a confused Fed:
The fact the Fed is buying corporate bonds at all signals favoritism toward big existing players — indebted lumbering behemoths that can’t innovate. It’s not as if the Fed is going to take the largesse it creates from thin air and spread it around to a plucky but capital-starved startup, right?
…click on the above link to read the rest of the article…
