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2020-

2020-03-23 c (updated in response to reader comments)
Alas, poor dollar, I knew thee well.

Just as the US military had to destroy villages in southern Vietnam in order to save them. The US Treasury and Federal Reserve have announced plans to do the same to the faith-based currency formerly known as the US dollar.

1. Kashkari Says Fed Has "Infinite" Amount Of Cash: "We Create It Electronically"

Either Neel Kashkari is long physical gold, or central bankers - those "magic people" in the words of Vitas Vasiliauskas - are intent on taking the world down with them instead of admitting they have inflated the biggest bubble ever and that the next inevitable step is fiat currency collapse.

Kashkari, who is part of a growing group of Monday morning quarterbacks who didn't predict the financial impact of coronavirus until about 10 minutes ago, and who is best known for coming up with the TARP bailout amount during the first bailout yet has somehow managed to fail up all the way to being mentioned as Powell's imminent replacement, added the certainty that only a Fed governor could add to the situation on 60 Minutes Sunday night.
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Then, the peculiar topic of cash came up, at which point Kashkari shared an interesting anecdote.

"I heard from a bank in our region, a well-to-do customer came in and said 'I want to withdraw $600,000 in cash.' Now, we can supply all the cash that the banks need to meet their customer's concerns. But it just speaks to the fear and the uncertainty that's rippling through the economy," he says.

When asked further about whether or not banks will have cash, he responded: "This is literally why Central Banks exist. We're the lender of last resort. This is literally why Central Banks exist. If everybody gets scared at the same time and they demand their money back, that's why the Federal Reserve is here. We will absolutely meet those demands."

2. In Unprecedented Move, Fed Unveils Open-Ended QE Including Corporate Bonds

Coming into Monday, the Fed had a problem: it had already used up half of its entire emergency $700BN QE5 announced last weekend.

Which, together with the plunge in stocks, is why at 8am on Monday, just as we expected - given the political cover they have been provided - The Fed unveiled an unprecedented expansion to its mandate, announcing open-ended QE which also gave it the mandate to buy corporates bonds (in the primary and secondary market) to unclog the frozen corporate bond market as we just one step away from a full Fed nationalization of the market (only Fed stock purchases remain now).

As noted elsewhere, the Fed’s new credit facilities carry limits on paying dividends and making stock buybacks for firms that defer interest payments, but have no explicit restrictions preventing beneficiaries from laying off workers.

Additionally, in addition to Treasuries, The Fed will buy Agency Commercial MBS all in unlimited size.

3. While #1 and #2 above are unfortunately factual, this section is not:

In other ridiculous and fantastic news, at the Pentagon, a seance was held and a male-to-female trans-sexual Colonel began channeling the late Gen. Curtis LeMay who provided detailed plans for a surgical nuclear war to decapitate the leadership of the Peoples Republic of China. It was said that a "jolly little war" would cure our economic malaise.

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