Free Republic

The Fed announced Tuesday morning that it would be establishing a repurchase agreement facility for foreign and international monetary authorities (FIMA) that have accounts at the central bank’s New York branch. Through the FIMA repo facility, other central banks and monetary authorities unable to make smooth trades in the open market will be able to temporarily liquidate their positions in Treasuries.

According to the U.S. Treasury, as of February 29, 2020, there was $16.9 trillion in marketable U.S. Treasury securities outstanding. Of that amount, at the end of February, the Federal Reserve held $2.47 trillion or 14.6 percent – making it, by far, the largest single holder of U.S. Treasuries anywhere in the world. ...But exactly how can a so-called “free market” function smoothly if the country’s own central bank is cornering the market. Salomon Brothers paid a $290 million fine and came close to getting slapped with criminal charges by the U.S. Department of Justice in 1992 for manipulating prices...

The economy isn’t helped by rushing back to work in the face of a pandemic, according to a new study by Federal Reserve researchers. At a time when the lieutenant governor of Texas has said senior citizens would be willing to sacrifice their lives for a better economy and when President Trump has fretted that the cure may be worse than the disease, a new research paper looked at the impact of the 1918 Spanish flu on the U.S. economy. Far from hurting the economy, what are called nonpharmaceutical interventions — for example, shutting schools, establishing quarantines and restricting business...

https://thefederalist.com/wp-content/uploads/2020/03/Trump-Mnuchin-And-Cabinet-Meet-With-China.-White-House.-Shealah-Craighead.-e1584750455621-998x649.jpg> Just beyond -- and in the midst of -- the public health and financial liquidity crises is the expansive and potentially devastating solvency crisis. The U.S. economy is in trouble, and if you can believe it, that trouble isn’t simply the closure of Main Street, the massive number of nationwide layoffs, and the danger of financial crisis we’ve all heard about. As companies run out of cash, pushing them toward insolvency, our country’s business-to-business trust is at risk of coming apart — tearing and ultimately collapsing the delicate system that keeps industries as diverse as farming, chemicals, and aluminum...

Standard Macro policy, taught to every student, says that the government should accumulate “budget surpluses” during good times (like the past few years). That the positive balance should then be accessed and spent, when the “business cycle” kicks in and our economy dips for whatever reason. …..In short, the Federal government should not have to borrow to fund all the emergency-assistance being discussed in the news (or have the Federal Reserve furiously printing more fiat dollars to bail out asset prices). These policies only take us further down the road to a larger debt - and inflation. This “bill” will...

House Speaker Nancy Pelosi's coronavirus bill is not enough. It is not nearly enough. And if there is any hope of keeping the U.S. economy from free fall, its deficiencies must be addressed this week. House Speaker Nancy Pelosi’s coronavirus bill is not enough. It is not nearly enough. And if there is any hope of keeping the U.S. economy from free fall, its deficiencies must be addressed this week with a combination of immediate and direct aid to the businesses that feed our families, host our celebrations, employ our neighbors, sponsor our Little Leagues, and make our towns our...

During a press conference on Sunday, President Donald Trump announced that the Federal Reserve is taking drastic action to cushion the economy from the Wuhan coronavirus outbreak that has become a pandemic. According to Trump, the Federal Reserve will drop the interest rate to near zero.  "The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent," the Federal Open Market Committee said in a statement. "The...

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus. Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days. The Fed also cut reserve requirement ratios for thousands of banks to zero. In addition, in a global coordinated...

In a surprise move, the Federal Reserve cut its benchmark interest rate by a sizable half-percentage point Tuesday in an effort to support the economy in the face of the spreading coronavirus. Chairman Jerome Powell noted that the coronavirus “poses evolving risks to economic activity.” It was the Fed’s first rate cut since last year, when it reduced its key short-term rate three times. It is also the first time the central bank has cut its key rate between policy meetings since the 2008 financial crisis and the largest rate cut since then. […] The group of major industrial countries,...

WASHINGTON—The Federal Reserve cut its benchmark rate by a half percentage point on Tuesday morning, delivering a booster shot to stem potential economic disruptions from the spreading coronavirus epidemic. Tuesday’s cut, which lowered the federal-funds rate to a range between 1% and 1.25%, is the first to occur in between a scheduled policy meeting since the 2008 financial crisis. The action was approved unanimously. In a statement, the central bank also held out the prospect for further stimulus. “The committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate...

Sen. Bernie Sanders's rise, his supporters, and the national mood he is running in mirror the president's circumstances four years ago, and the primary is an early tell. Bernie Sanders has the lead in the Democratic primary and, while far from over, his supporters’ enthusiasm greatly outpaces any of the rival campaigns and he is poised to continue winning contests and delegates. Party leaders and a good deal of their supporters in the media are in a full panic, struggling to derail the socialist insurgent’s campaign before he leads the party to what they predict is electoral ruin and four...

America’s long-term national debt problem could lead to economic Armageddon. The misguided belief that we are actually paying down our debt is giving this administration a false sense of security. We can have all the growth we can muster in our GDP but if we are spending more than what’s coming in, the debt will only keep building. The days of growing our way out of debt were lost $5 trillion ago. This week the CBO announced that for the first four months of the government’s fiscal year ending in January we had created a deficit of $1.2 trillion. As a...

The economics profession embarked this year on a soul-searching appraisal of perceived hostility to women and minorities in its ranks, and the Federal Reserve—the nation’s largest employer of Ph.D. economists—wants to get ahead of the curve. For the Fed, where three quarters of its research economists are men and most are white, facing up to the lack of women and minorities among these employees isn’t just a matter of appearances. A staff that better reflects the U.S. population could limit the potential for groupthink or blind spots that hinder the central bank’s assessment of how the economy is changing. “The...

ThereÂ’s a sense that the bureaucrats who command the federal leviathan work for themselves, not for the country at large. That wasnÂ’t true of Paul Volcker. Since his death last week, Paul Volcker has been heavily eulogized. ThatÂ’s not the purpose here. In these trying times, AmericansÂ’ faith in our nationÂ’s institutions is at historic lows. Once-vaunted organizations like the FBI now struggle to command a majority of AmericansÂ’ support.The causes for this are legion. But there is a general sense that the vast federal appendages created in the last 100 years have little connection to the interests of...

[Volcker's] obituaries were disappointing for them almost uniformly promoting the fiction of Volcker as inflation slayer. Such a view doesn’t square with simple economic history. Indeed, explicit in the accepted wisdom that Volcker was “inflation’s worst enemy” (Hoover Institution’s John Taylor) is that economic growth causes inflation. As Phillips Curve devotee Neil Irwin put it in the New York Times, Volcker allegedly beat inflation “at the cost of what would become the worst recession in the seven decades between the Great Depression and the global financial crisis.” In the analysis of seemingly everyone, job loss and greatly reduced prosperity were...

WASHINGTON - After three interest rate cuts and a fresh round of record highs for U.S. stock markets, has President Donald Trump lost interest in the Federal Reserve? A count of tweets from Trump about U.S. monetary policy suggest a detente may have taken hold between an elected leader who has lambasted Fed officials with insults like “clueless” and “boneheads” and a central bank whose rate cuts have helped buffer the economy from the administration’s own unpredictable trade and tariff policies. On Wednesday, the Fed left interest rates unchanged at the end of a two-day policy meeting, and signaled it...

Imagine what it must be like for private companies that have invested in a new technology and suddenly find out they have to compete with a tax-supported government agency -- the very one that also regulates the industry. That's what happened when the Federal Reserve entered the real-time payments market. What this development means for the private companies and the consumers they serve in this market is unclear. The outcome will depend on the Fed's willingness to play by the rules. The Fed plans to develop what it's calling the FedNow Service, which is expected to launch sometime in the...

The Federal Reserve Bank of New York added $70.2 billion in temporary liquidity to financial markets. Tuesday’s intervention came in two parts. One was via overnight repurchase agreements, or repos, that totaled $41.7 billion. The other came in a $28.5 billion 13-day repo. The Fed took all securities offered in both operations. Central-bank repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by the securities. The Fed’s money-market operations are aimed at ensuring that the financial system has enough liquidity and that short-term borrowing rates are stable...

President Trump said he would impose tariffs, effective immediately, on all steel and aluminum shipped into the United States from Brazil and Argentina. “Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers,” Trump said in Monday morning tweet. He then directed his attention to the Federal Reserve, saying the central bank should “act so that countries, of which there are many, no longer take advantage of our strong dollar by further devaluing their currencies. This makes it very hard for our [manufacturers] & farmers to fairly export their goods....

A bill filed in advance of the next legislative session would make gold and silver legal tender again in the state of South Carolina. State Representative Stewart O. Jones submitted legislation that would restore gold and silver to their status as legal tender in his state. In an op-ed written in October, Representative Jones set out the sound economic principles that support his proposed statute: To understand the full extent of the debt and the destruction of the dollar, it’s essential to realize that paper money has a history of being printed as bills of credit to finance runaway government....