The Fed Made Some Historic Decisions

In order to limit the effects of the coronavirus crisis on the economy as much as possible, central banks around the world have followed in the Fed’s footsteps.

The Fed was the first central bank to take action from the beginning of March 2020. In total, the Fed cut interest rates by 150 basis points in two steps.

This historic decision, which positioned interest rates at zero, was only to prepare the ground for the measures that the Fed was going to announce. The culmination of the Fed’s actions is an unlimited quantitative easing program that has been in place since mid-March 2020.

Almost unnoticed, the lowering of the reserve requirement rate to zero for U.S. banks is also a major danger to citizens and the money they have in their bank accounts.

From now on, nothing you own in the bank is really guaranteed. Your bank account may show a positive balance of $25,000, there is no guarantee that your bank will be able to give it to you immediately if you wish.

Everything seems to indicate that the entire monetary and financial system was out of breath before the coronavirus crisis erupted in early March 2020.

We were at the end of a major bull market cycle on Wall Street, and the liquidity crisis that erupted behind it is proof of that.

Under these conditions, the Fed had to pull out the nuclear weapon to reassure all the financial markets. The announcement of the unlimited quantitative easing program that it has been conducting since mid-March 2020 is something that has never been seen before.

In total, more than $8T will be injected into the fiat system. When we talk about liquidity injections, you must understand that this corresponds to the Fed’s printing more U.S. dollar.