Have we reached the end of Federal Reserve magic?
For more than a decade the central bankers have printed money out of thin air and seemingly rescued the U.S. equity markets from every potential bad outcome. While they drove interest rates into the ground and crushed savers along the way, the bankers always claimed that the overall health of the financial markets was more important.
It’s worth noting their actions never did much for GDP growth, just stocks.
But now we might have reached the limit of what the Fed can do.
On Thursday midday, the Federal Reserve Bank of New York said it will offer $500 billion in three-month repurchase operations, where it buys bonds from a financial firm with a commitment to sell them back at a later date, today, and will offer two more operations tomorrow, both at $500 billion.
The full $1.5 trillion announcement brought stocks back from deep losses for a few minutes, but then stocks rolled over and plunged again.
Apparently people are aware that printing money does not cure all ills, including the coronavirus or its ensuing panic.