Fed to buy stocks? Bye bye capitalism/free markets!

www.cnbc.com...

The Fed might buy stocks. If this happens you can kiss the free markets and capitalism goodbye.

Many folks may not appreciate this, but generally speaking the bond market is way, way larger than the stock market:

learnbonds.com...

This is why The Fed bought debt - not equities. Stock market can’t really handle an artificial, multi-trillion dollar investment into it without materially distorting prices.

If the US Gov or Fed starts directly injecting money into the equity markets my first reaction is three things:

1) you better be triple long when that money hits.
2) it’s the end of the free market as we have known it for 100+ years.
3) this will mean they nationalized every major business in the US.

My career is in the equity capital markets - and no, I’m not a retail broker or broker of any kind. I live this daily and I’m telling you right now this is scary AF.

As good as it sounds for the markets short-term, this is a really really really bad idea. It will make 200k Covid deaths seem like a pleasant walk in the park relative to future implications of this “solution”.

This is not good.

a reply to: EnigmaChaser

We are not supposed to talk about the economy or the absolute sh!tstorm that is coming by the actions of our current administration, much less the federal reserve.

We need to instead be laser focused on how many people died today and not think about the rest of America's future at all.

Excellent OP and THAT is exactly my real worry going forward.

We are essentially treating the patient by nuking their city.

And nobody seems to get that.

S&F

It would literally take an act of congress to do that. I guess if that happens we'll know who's for destroying our economy and who isn't.

originally posted by: Lumenari
a reply to: EnigmaChaser

We are not supposed to talk about the economy or the absolute sh!tstorm that is coming by the actions of our current administration, much less the federal reserve.

We need to instead be laser focused on how many people died today and not think about the rest of America's future at all.

Excellent OP and THAT is exactly my real worry going forward.

We are essentially treating the patient by nuking their city.

And nobody seems to get that.

S&F

Amen, brother.

I've been an equity investor since I was a teenager. I went to school for Economics. I work in capital markets.

This is a real, real, real, realrealrealrealreal bad proposition.

Covid can kill 5mm Americans and it won't hurt the future like this would. Hell, 20mm Americans. Fact-based. Every 401k, IRA, pension, equity based annuity, ALL OF IT. That's hundreds of billions/trillions worth of American's retirement money, education funds, endowments, scholarship funds, Trusts, grants, CRUTs - ALL OF IT.

Time to stop worrying over this damned virus and time to start realizing all of our futures are about to get gobbled up by the Government.

Put Americans back to work NOW. RIGHT NOW.

The bleeding heart fools of this country led us to this point - we have no one to blame but ourselves. If you're for lockdown/"Stay at home"/etc. the blame is squarely on you if this actually comes to pass.

Sleep on that.

NOTE: I'm not alarmist (which my other posts can verify if you'd like to verify)… but this is some serious stuff.

I'm telling you now, as someone with a deep background in capital markets this is a really horrific event if it happens.

I'm hoping that the major corporations of America lobby against this heavily. I can't believe I just said I'm for lobbying, but in this instance, lobby allllll day - PLEASE!

The government often buys stocks.

The federal government and state governments used to own entire businesses. It still owns a couple iirc.

originally posted by: HalWesten
It would literally take an act of congress to do that. I guess if that happens we'll know who's for destroying our economy and who isn't.

You think those idiots in Congress actually get capital markets and the implication of their idiocy?

No, they don't. Why? Because they never run out of YOUR money.

In this case, they won't run out of it, they'll just own it.

This is worse than "The Vid" could ever conceivably be.

originally posted by: Ohanka
The government often buys stocks.

The federal government and state governments used to own entire businesses. It still owns a couple iirc.

A couple... not the broad basket of the S&P.

Never mind the precedent this sets.

You can buy round lots of 1k shares. They can be round lots of 20mm shares.

Keep the Fed and the Gov out of the broader capital markets. The capital markets are the lynch pin that keeps us separate from the Russians/Chinese/etc.

Take that away, game over. You'll never recognize America again.

Socialsm as a cover for fascism. Mussolini would be proud..a reply to: EnigmaCh...aser

originally posted by: Ohanka
The government often buys stocks.

The federal government and state governments used to own entire businesses. It still owns a couple iirc.

They buy securities, debt, not stocks. It's not allowed unless congress amends the law.

Bonds and stock are 2 different subjects.
CNBC is full of "stuff"

The stimulus money the government is handing out can be used for anything, but paying rent when you are unemployed is high on the hierarchy of needs. That trickles up to landlords that collect rent and banks that loaned money for mortgages.
After 2008 the court foreclosure pipeline was clogged for 5 years in many states.

We haven't heard about frozen investment accounts which historically happens when investors try to remove their funds after uninsured speculation goes bad. This time around they would obviously intervene in the stock market to prevent a fear of losing money meltdown to zero. Wost case scenario is more likely flat markets for a year if we are lucky.

a reply to: EnigmaChaser

This is a real, real, real, realrealrealrealreal bad proposition.

My aunt does what you do and has handled my investment portfolio as well as everyone else's in the family since the 60's.

We made a lot of money in 2007-2008, for instance.

She has always been calm, calculated and has made excellent decisions.

She is currently freaked the hell out about what is happening.

So I don't believe you are being an alarmist... quite the opposite.

My last thread was about the difference in impact on our lives going forward economically vs the death toll.

The death toll from the virus really doesn't matter in the long term.

People don't get that.

/facepalm

a reply to: HalWesten

You may want to look up the "Plunge Patrol Team".

a reply to: EnigmaChaser

When you say the Fed do you mean the federal reserve or the Federal government?

a reply to: Alien Abduct

I was wondering the same thing. The federal reserve isnt part of the federal government. Its a private business.

I think everyone is freaking out no matter their opinion.

originally posted by: HelloboysImbackguy
a reply to: Alien Abduct

Im wondering the same thing. The federal reserve isnt part of the federal government. Its a private business.

I think everyone if freaking out no matter their opinion.

Ironically the federal reserve is an example of a private business that should be state-owned.

originally posted by: Lumenari
a reply to: HalWesten

You may want to look up the "Plunge Patrol Team".

Interesting. Thanks.

What surprises me is all of you so called financial and capital experts on here believing we ever had anything resembling a “free market”. That # is controlled and manipulated in almost every single facet.

Shouldnt be owned by anybody...the Treasury should control the issuance of monies and collect ZERO interest... a reply to: Ohanka

a reply to: EnigmaChaser

I made a post on March 15 with aggregate information from several sources that warned of this; seeing it for what it was and what it could actually turn into.
I was hoping that myself and others were wrong, but why self delude at this point.
www.abovetopsecret.com...