“The Fed has more programs than Netflix.” Incoming helicopter money!
The Fed’s next moves in order:
-This is the most likely because this has been done by the U.S. Federal Reserve in the past. Thus, if one were a betting man — like a stock trader — you should have already “priced-in” this fact.
-While some people might be rolling their eyes at this suggestion, I don’t think that’s fair. They might be rolling their eyes because Jerome Powell has been, at best, indifferent to the idea. In my opinion, that would quickly change if the Federal Reserve can’t get interest rates back to at least 2% before the next recession. Not to mention NIRP is psychological and thus self-fulfilling, and I would hope that Powell knows this.
-To see what our Federal Reserve will do, just look at the Bank of Japan (BOJ). The Bank of Japan is always 5–20 years ahead of us. The Bank of Japan has purchased stocks (and also used NIRP-negative interest rate policy). Oh and not only does the BOJ purchases stock ETFs, but they also purchase REITs (Real Estate Investment Trusts) — it’s like a 2 for 1 deal with the BOJ as your stock broker and real estate agent. Think of it this way, if you buy an S&P 500 fund, there are some REITs in there.
-You might say that the Federal Reserve needs approval from Congress to print money and rain it down on the people. Even if that’s granted, it’s not impossible to get approval. But secondly, the Federal Reserve found a legal loophole when they started purchasing corporate bonds (yes, you read that right) in March. The U.S. (and other countries to a larger extent) already did helicopter money indirectly this year. Governments sent out money but central banks financed the process.
Bonus: 5. Purchasing clown paintings
-Just kidding. This won’t happen…I hope.
You might not agree with the order that these moves will come in and that’s fair. But can you really say any of this is implausible after the Fed started buying JUNK bonds earlier this year?