The Nationalization of the Financial System; Me wan’ go home

Excerpted from today’s edition of Notes From the Rabbit Hole, NFTRH 596. I may publish another segment on inflation that goes well with this one later in the week.

The next segment on inflation was originally planned as the opening notes, but this new topic has rammed its way to the forefront on Sunday morning. It arrived in my in-box, I saw it at Twitter and it’s making the rounds. I was sent a YouTube video of a narrator talking about how Donald Trump has used the crisis situation to do right by America.

In some ways I think he has done right by the country. The re-shoring of our industries and resources, for example. But in the nationalization of the Fed and the financial system he is not doing something heroic by any means. He – in my opinion – is cutting out the middle man with respect to more efficiently being able to promote inflation.

See the Washington Post article

“But it’s the alphabet soup of new programs that deserve special consideration, as they could have profound long-term consequences for the functioning of the Fed and the allocation of capital in financial markets. Specifically, these are:

  • CPFF (Commercial Paper Funding Facility) – buying commercial paper from the issuer.
  • PMCCF (Primary Market Corporate Credit Facility) – buying corporate bonds from the issuer.
  • TALF (Term Asset-Backed Securities Loan Facility) – funding backstop for asset-backed securities.
  • SMCCF (Secondary Market Corporate Credit Facility) – buying corporate bonds and bond ETFs in the secondary market.
  • MSBLP (Main Street Business Lending Program) – Details are to come, but it will lend to eligible small and medium-size businesses, complementing efforts by the Small Business Association

What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is acting as banker and providing financing. The Fed hired BlackRock Inc. to purchase these securities and handle the administration of the SPVs on behalf of the owner, the Treasury.

In other words, the federal government is nationalizing large swaths of the financial markets. The Fed is providing the money to do it. BlackRock will be doing the trades.

This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.”

In other words, and I will not mince words here, it’s…

Banana Republic here we come! Bananas for you, bananas for me.

A beautiful bunch o’ ripe banana

Daylight come and me wan’ go home

Hide the deadly black tarantula

Daylight come and me wan’ go home

The hidden black tarantula would be the accountability that will be lost in the banana giveaway frenzy. We are opening the spigots to give the ultimate power of ‘something for nothing’ to a man who has been all about leverage in building his powerful enterprise. If it fails, go bankrupt, continue to insist it is viable and voila, it is! Exponentially so. After all, it’s only more debt piled up. Trillions more bananas for everyone!

So the next segment is about inflation. I was asked for my thoughts on the nationalization of the financial system by a subscriber. Here is my thought.

In-Flay-Shun to one day, el Hyper

It has the benefit of minimizing debt over time as it cheapens money. With politicians in control of this process how can it not just go one way, the way of inflation on demand, as needed? From Wiki… (substitute ‘general economy’ for ‘public lands’).

“In economics, a banana republic is a country with an economy of state capitalism, whereby the country is operated as a private commercial enterprise for the exclusive profit of the ruling class. Such exploitation is enabled by collusion between the state and favored economic monopolies, in which the profit, derived from the private exploitation of public lands, is private property, while the debts incurred thereby are the financial responsibility of the public treasury. Such an imbalanced economy remains limited by the uneven economic development of town and country, and usually reduces the national currency into devalued banknotes (paper money), rendering the country ineligible for international development credit.”

I watched part of the video analyzing this move as a great positive for America. The comments to the video were universally in favor, generally aggrandizing Trump. I would also think that a typical making of a Banana Republic includes those scheduled to be hurt most cheering the loudest, initially.

Me wan’ go home…

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