Right now all the attention is on the $2 trillion bill lumbering through Congress, but few people are noticing that what the Fed is doing is way bigger. For over a hundred years, the Federal Reserve Act has prohibited them from intervening in the corporate debt market. Yet earlier this month the Fed just “interpreted” the Act, basically ignoring it, and announced that they would start buying corporate debt like drunken sailors.
Maybe they have no choice now, but at some point this will bite us in the butt.
Erik Townsend interviews Luke Gromen:
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