Fed announces extension in lending facilities until end of the year

Reuters/Lindsay Dunsmuir/7-28-2020

“Hopes for a quick recovery have been dashed as the United States continues to struggle to contain the virus. … All [the extended facilities] are designed to keep credit flowing to businesses and households and stave off long-term harm to the economy. Tens of millions are still out of work and fears are growing that the situation could worsen again as relief programs reach their initially scheduled end.”

USAGOLD note:  Like we might have guessed, it looks like the Fed intends to keep the spigot running wide open and it doesn’t want there to be any ambiguity on the subject. On the other side of the equation, the question remains to what degree consumers and businesses will avail themselves of the Fed’s intended largesse. Ultimately, if borrowers fail to materialize in sufficient quantity, the central bank and federal government could be forced to ever-larger and more consistent drops of helicopter money to keep the economy afloat.

Repost from 7-29-2020