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Could you elaborate on how its a wealth grab?
by no_flags 7y ago
Could you elaborate on how its a wealth grab?
- tonyhb 7y agoShort: There are money runs on funds causing liquidity issues. Funds sell assets to market makers for cash to give rich people their money. This causes a downwards spiral and asset prices plunge. Now, the fed will continue to buy assets (eg. but not limited to corporate bonds which have tanked and taken out a couple firms and MMs) so that rich people can liquidate their assets. We will be bag holders as the fed will own corporate bonds that – frankly – the existing financial system players expect to default. We take the hit and own junk so that wealthy people can extract money now. This is the high level to my knowledge. Please add more colour and correct me if there are things that I'm missing :)
- myth_drannon 7y agoLast week US Fed bailed out hedge funds that were highly leveraged. $1.5 trillion transfer to save high net worth individuals. https://www.bloomberg.com/news/articles/2020-03-19/before-fed-acted-leverage-burned-hedge-funds-in-treasury-trade https://www.bloomberg.com/news/articles/2020-03-19/before-fe...
- jdhn 7y agoThank you for posting this, it's both informative and highly infuriating
- eyeinthepyramid 7y agoThe $1.5 trillion was a fund of one day fully collateralized loans, of which only ~$100 billion was actually used. There was no wealth transfer, just the fed following its mandate to keep interest rates on short-term loans within an acceptable band. Here's the daily totals of repo loans: https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000 https://apps.newyorkfed.org/markets/autorates/tomo-results-d...