Fed to buy junk bonds, lend to states in fresh virus support
The US Federal Reserve is openly <i>buying crap</i> (junk bonds!) and <i>wildly overpaying for it</i> without pretending otherwise.<p>Its balance sheet will have grown by as much as <i>an order of magnitude</i> by the end of the month, far above any levels seen during the global financial crisis of 2008. (If you don&#x27;t know what this means, think of the Fed&#x27;s liabilities as &quot;all forms of money issuance.&quot;)  It&#x27;s issuing fresh money to buy crap from the people who are stuck holding it. The sellers will come out whole, the buyer -- i.e., the US government -- will suffer the losses.[a]<p>Meanwhile, the US Treasury is borrowing and trying to spend on the order of an additional 10% of GDP as quickly as possible, increasing the US federal deficit and borrowings by that much as quickly as possible.[b]<p>And all of this is <i>urgently necessary</i> to prevent economic collapse in the US. <i>Urgently necessary</i>.<p>We are in uncharted waters.<p>[a] You&#x27;ll see it here: <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WALCL" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WALCL</a><p>[b] You&#x27;ll see it here: <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;GFDEGDQ188S" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;GFDEGDQ188S</a>