Quantitative Easing for Stocks
[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway (“Berkshire”), or any other entity referenced. Edina Realty is a subsidiary of Berkshire.]
With the Dow in free fall, investors are looking to the cavalry (the Fed) to once again ride to the rescue.
Unfortunately, lowering interest rates from today’s already-infinitesimal levels isn’t an option.
So much for monetary policy.
Meanwhile, fiscal stimuli of the kind that Congress and the President can deliver — assuming there was nimble, cohesive leadership — take time to work their way thru the system.
Which begs the question: what can be done, now, to arrest the plunge in equities markets?
Lender Stock Buyer of Last Resort
At least to me, the financial equivalent of an adrenaline shot to the heart would be the Fed announcing a program to purchase directly, for its own account, a wide range of equities.
When markets stabilized, hopefully short-term, it would sell them — perhaps even booking a profit.
Call it, “Quantitative Easing for Stocks.”
Unprecedented?
Yes, at least for the U.S. (China and Japan both hold stakes in for-profit corporations).
But, what’s currently roiling today’s highly integrated financial markets is also without precedent . . .
See also, “2020 Stock Market Swoon: Just Two (Very Bad) Days Till All Trump Gains Erased?“; “Free Mortgages! Git Your Free Mortgage!!“; and “Coronavirus and the Housing Market.”
