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Federal Reserve to lend additional $1 trillion a day to large banks
Key Excerpts from Article on Website of PBS News Hour
Posted: March 21st, 2020
https://www.pbs.org/newshour/economy/federal-reserve-to-lend...
The Federal Reserve moved with unprecedented force and speed Friday to pump huge amounts of cash into the financial system to ease disruptions that have escalated since the viral outbreak. The New York Federal Reserve Bank said it will offer $1 trillion of overnight loans a day through the end of this month to large banks. That is in addition to $1 trillion in 14-day loans it is offering every week. Wall Street analysts say the huge number is intended to calm markets by demonstrating that the Feds ability to lend short-term is nearly unlimited. The Fed is also buying Treasury bonds at a furious pace, and will soon run through the $500 billion in purchases it announced on Sunday. It is also accelerating its purchases of mortgage-backed securities. Most analysts expect they will buy more. All the Feds emergency steps are intended to pump cash into a financial system that has seen a spike in demand for dollars. Steven Friedman, a former economist at the New York Fed, [said] The Fed is trying to play the role of shock absorber. Theyve effectively thrown the kitchen sink at the markets and the economy, said Gennadiy Goldberg, senior U.S. rates strategist for TD Securities. Also Friday, the Fed said it would expand its currency exchanges with five central banks. The Fed provides dollars to overseas central banks because some business is conducted overseas in dollars and foreign banks also provide dollar-denominated loans to their customers.
Note: Take $1 trillion and divide it by the U.S. population of 330 million and you find that this amount is equivalent to $3,000 for every man, woman, and child in the US. And that is what the Fed is lending every day. Where is all this money coming from, and why is it going to the banks? For more along these lines, see concise summaries of deeply revealing news articles on the coronavirus from reliable major media sources. Then explore the excellent, reliable resources provided in our Banking Information Center.
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