The Federal Reserve's Bazooka Can't Save the Market or the Economy

Shah Gilani

If you think the Fed's going to fire hundreds of billions or trillions of dollars of "stimulus" rounds at the coronavirus crisis and pierce its grip on mankind, on the market, and on the economy, you're wrong.

This is an existential threat to humans, markets, and economies, which the Fed's ammo can't kill – but it sure can make it worse.

Here's what the Fed's doing, what it's going to do, why it won't work, how you'll know it's not working, and how they're going to make everything worse…

Bazookas and Moving Targets

Back in July 2008, as the financial crisis was heating up, then Treasury Secretary Hank Paulson asked the Senate Banking Committee for an unlimited amount of credit to rescue Fannie Mae and Freddie Mac, explaining, "If you've got a squirt gun in your pocket, you may have to take it out. If you've got a bazooka, and people know you've got it, you may not have to take it out. By increasing confidence, it will greatly reduce the likelihood it will ever be used."

Paulson got his bazooka, but he still had to run back to Congress two months later and beg for $700 billion more, this time to bail out Wall Street.

The U.S. Federal Reserve – America's private central bank – on the other hand, doesn't have to go to Congress; it's got its own bazooka and an unlimited amount of ammunition, which it's already been firing at targets left, right, and center.

The Fed can "print" as much money as it wants without asking anyone for anything and fire its funds at will.

It's already fired hundreds of billions of dollars at its primary target, the too-big-to-fail banks that feed the Wall Street moneymaking machine – and lately, once again, money-losing machine.

Shah Gilani

About the Author

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Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

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