March 26 (EIRNS)—The giant $2.2 trillion relief bill passed Wednesday night, March 25, by the Senate includes many expenditures that are needed, and some urgent, to compensate the impact of the coronavirus pandemic on the U.S. economy and labor force. But it also contains a huge Wall Street poison pill: Liquid balm for all Wall Street’s millions of speculations, but hyperinflationary poison for the nation and, because of the Fed’s global reach, other nations as well.
In their March 26 “Wall Street on Parade” website, having read the fine print of the legislation, Pam and Russ Martens provide detailed evidence. “The text of the final bill was breathtaking in the breadth of new powers it bestowed on the Federal Reserve, including the Fed’s ability to conduct secret meetings with no minutes provided to the American people.” Until now the minutes of Federal Open Market Committee and Board of Governors meetings are published in the following month. Why would secrecy now be found necessary?
“When it comes to the money going to the Federal Reserve and then out the door to Wall Street,” they write, “the legislation says only this: ‘Not more than the sum of $454,000,000,000 shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system.’ ” This, the authors write, is because Treasury Secretary Mnuchin and Fed Chair Powell believe the Fed can print, for every financial asset bailout operation, ten times what the Treasury turns over in taxpayers’ funds. And this, because the Fed will be creating “special purpose vehicles”—well remembered among the causes of the Wall Street banks’ 2008 downfall and Enron’s earlier predations—for these bailouts. The Treasury will invest the government’s funds in them. This makes the “bailout of the bailout” one layer more opaque.
Many other aspects of the relief Bill 3 legislation are clearly necessary, some urgent. There is $150 billion in aid to states to fight the coronavirus, a further $50 billion to cities. There is $130 billion in aid to hospitals to stay open and expand. There is $365 billion for retention loans to small businesses for payroll and overhead, which loans will be forgiven if they do maintain their payroll. There is $45 billion for disaster relief; $27 billion to replenish the United States strategic stockpile of medical equipment and $16 billion for personal protection equipment of health workers in the same stockpile. And the well-known grants to individuals and households, approximately $3,500 for a family of four (about $300 billion total). The backup for the Fed’s open market operations is thus the largest chunk in the huge bill.