Dear family and friends,

A plain English interpretation of the Federal Reserve’s actions yesterday.
- Intro
- Inflation disclaimer
- Why this matters
- 6 major programs
- A promise
- Conclusion
[1/16]
Intro:

Yesterday, the Federal Reserve made a sweeping announcement promising up to $2.3 Trillion (with a T) dollars in support programs. Here’s a pic of the amount of money the Fed has already pumped out and a pic of where they’re likely headed. [2/16]
Inflation disclaimer:

Say it with me, “Inflation is not a concern”
Shout it with me, “Inflation is not a concern”
Share it with your friends, “Inflation is not a concern”
Teach your kids, “Inflation is not a concern”
[3/16]
Why this matters:

Congress told the Fed a long time ago to help out when bad happens to the economy. Remember - the economy is you, me, your mom and your brother, your teachers, plumbers, doctors, and everyone in between. 17 million of us lost jobs the last three weeks. [4/16]
Major program 1:

State and city governments can’t spend whatever they want to to support their residents like Congress can (the only current limit on Congress is political will). The Fed promised $500 billion in cheap loans to help those state and city governments. [5/16]
Major programs 2&3:

The big rescue package passed by Congress two weeks ago included $349 billion in cheap loans to small and medium sized businesses - but those loans have to go through the regular banking system... [6/16]
Major program 2&3 continued:

Two of the Fed’s programs, (a) the PPPLF and (b) the Main Street Lending Programs provide extra incentives to make it easier for banks to make sure those loans get out into the economy and into the hands of the businesses that need them. [7/16]
Major programs 4&5&6:

Big businesses are suffering significant losses; their failure would also cause lots of harm to regular people. The Fed significantly expanded three programs (PMCCF, SMCCF, and TALF) to help make sure the larger businesses have access to cheap loans [8/16]
Major programs 4&5&6 continued:

The Fed made history with these programs because of what part of the business world they’re willing to help. New areas include: commercial mortgages (like your house mortgage but for business loans), corporate bonds (the way businesses...[9/16]
Major programs 4&5&6 continued:

…normally borrow money) investment grade bond ETFs (healthy companies pooled together), and high yield bond ETFs (riskier companies pooled together). This is a really big step and something the Fed hasn’t done before. [10/16]
A promise:

So much of the economy is based on expectations. We make decisions on what we'll do now (as individuals, families, and businesses) based on where we think things will be in the future. In an interview w/ @davidmwessel... [11/16]
A promise continued:

…Fed Chair Jay Powell promised that although the programs mentioned are scheduled to go until Septembr, “If they have to go longer, then of course they will. We’ll be looking to make sure the economy really is on a solid footing before pulling back…[12/16]
A promise continued:

“...And then, as we start pulling back, we will do so very gradually.” [13/16]
Conclusion:

Leadership of the Federal Reserve and the US Treasury are standing on the shoulders of the policymakers of the Global Financial Crisis of 2007-09. They have implemented the full playbook that Bernanke/Paulson/Geithner wrote…[14/16]
Conclusion continued:

...and are now writing chapters of their own. The most significant theme of these new chapters is the value of coordination between the Treasury, Congress, and the Fed. [15/16]
Conclusion continued:

In times of economic panic like this (and those to come) true emergency financial policy making has to be a full team effort.

Talk soon,
~Kaleb
[16/16]
p.s. a few recommendations:

- @vtg2 excellent thread 🐦 https://twitter.com/vtg2/status/1248630242803056640?s=20
- @jeannasmialak wonderful article 📰 https://twitter.com/jeannasmialek/status/1248379769034424321?s=20
- @ypfsatyale very wonkish breakdown with primary source links🕵️‍♀️ https://som.yale.edu/blog/federal-reserve-announces-23-trillion-lending-package
You can follow @KalebNygaard.
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