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(CNBC)   Federal Reserve to buy individual corporate bonds. Investors respond by buying individual corporate stonks   (cnbc.com) divider line
    More: News, Bond, Debt, Bond market, Finance, Financial markets, individual corporate bonds, Federal Open Market Committee, Federal Reserve System  
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769 clicks; posted to Business » on 15 Jun 2020 at 4:03 PM (18 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



Voting Results (Funniest)
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2020-06-15 4:04:57 PM  
11 votes:
This is fine.
 
2020-06-15 5:43:32 PM  
2 votes:

relaxitsjustme: This is f*cking horsesh*t.  The Fed has lost its mind.  It was shady enough buying bond ETFs but now they're going to straight buy corporate paper.  Uh huh and what happens when Hertz still goes bankrupt?  Who takes the haircut, because I'm pretty sure the taxpayer didn't ask for this one. Or are you going to keep them afloat at the expense of Avis shareholders and price discovery?  How do you decide which companies you're going to buy and which ones you're going to let fail, call your buddies at Blackrock and GS?


The Federal Reserve does not spend taxpayer money.  They are a Central Bank - when they want money, they wish it into existence and use it to purchase financial assets.  When those bond coupons are paid back to the Federal Reserve, the money is sent back into the void.  If a bond that was held on the FR balance sheet were to default, it would represent a permanent expansion of the money supply.
 
2020-06-15 4:08:17 PM  
2 votes:

Mad_Radhu: This is fine.


Is it, really. though?
 
2020-06-15 5:35:05 PM  
1 vote:
Some comments I picked up off Twitter:

All your #bonds are belong to us

Can't wait for the much needed liquidity injection into the Pokémon trading card market

But we can't afford healthcare for all.

I have a 1991 Tahoe with 247,000 miles on it. Maybe I can sell it to The Fed

Income inequality, nope never heard of it
 
2020-06-15 5:16:28 PM  
1 vote:
At this rate, we won't have to worry about toilet paper, we can just use dollar bills.
 
2020-06-15 4:58:39 PM  
1 vote:

sgarri7777: Brought to you the party that brought you   "no socialism"  The government buying junk bonds is about as socialist as you can get. A fourteen year old could figure how to exploit this for profit. Get loan, declare bankruptcy. Profit.


The Federal Reserve is not really "The Government".  They are a Central Bank that is supposed to act as a lender of last resort during a crisis.  The normal way of doing this is by lending to financial institutions that would then lend to these companies (and take a cut along the way) - this is just cutting Wall St. out of the direct money flows.
 
2020-06-15 4:46:16 PM  
1 vote:

sgarri7777: Brought to you the party that brought you   "no socialism"  The government buying junk bonds is about as socialist as you can get. A fourteen year old could figure how to exploit this for profit. Get loan, declare bankruptcy. Profit.


But, see, it's not socialism when the 1% are the beneficiaries, because... because... TRICKLE DOWN ECONOMICS!  Yeah... that's it.  These people are the JOB CREATORS, after all.
 
2020-06-15 4:27:34 PM  
1 vote:
Fark user imageView Full Size


Keep that sugar rush going. What's the worst that could happen? Well, other than crashing the stock market so bad it makes crashing to 19,000 look like a joke.
 
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