Monday, June 15, 2020

Federal Reserve Moves US One Step Closer to Fascism

Federal Reserve Bank building, Washington D. C.

"The means of production [under fascism] would remain nominally in private hands, but the state would play a primary role in production and allocation decisions," Llewellyn Rockwell has written in Fascism versus Capitalism.

The Federal Reserve has just announced it is going to make a major move with regard to the allocation of capital via the bond market.

The Fed announced today that it plans to add to its lending purchases by outright buying corporate bonds.

It said that it will create a corporate bond portfolio that would be based on a broad, diversified market index of corporate bonds. The index will be made up of all the bonds in the $9.6 trillion corporate debt market from companies that satisfy the lending program’s minimum ratings and securities that satisfy the maximum maturities, among other eligibility criteria.

It must be emphasized that the Fed is doing this because the free markets are not allocating funds in this manner. If these allocations were being done on the free market, the Fed would not need to step in.

This is nothing but the allocation of funds, via Fed money printing, in the sectors favored by the Fed. It is early stage corporate fascism.

The Fed has said companies that were investment-grade rated as of March 22 can be eligible for central bank purchases if they meet other criteria.

The Fed also said this indexing approach is designed to complement the existing purchases of ETFs. The central bank has bought around $5.5 billion of such debt through June 10, according to its most recent disclosures.


1 comment:

  1. Oh, how the lively marionette-corporations will dance and jump at the manipulations of their puppet-master government!