BlackRock, the world’s largest investment management company with an estimated $7.4 trillion in its portfolio, wrote the U.S. government’s economic crisis response plan – before there was even a crisis, reports Wall Street on Parade.
In August 2019, at the Jackson Hole, WY, meeting of G7 nations as the global economy was sliding toward recession, BlackRock unveiled its plan, called “Going Direct.” It called for stimulating economies by melding governments’ fiscal policy, which targets tax rates and public spending levels, with central banks’ monetary policy, which controls interest rates and the supply of money.
Foreseeing a coming worldwide recession, “Any additional measures to stimulate economic growth will have to go beyond the interest rate channel and ‘go direct’,” meaning that governments and central banks should give money directly to businesses and government agencies. “One way or another, this will mean subsidizing spending – and such a measure would be fiscal rather than monetary by design.”
A month later, on 17 September 2019, the U.S. Federal Reserve implemented the plan when it began making loans totaling billions of dollars a week “direct” to brokerage and investment banking firms when interest rates for overnight bank-to-bank repurchase agreements or “repo loans” spiked, threatening to send money markets into turmoil.
The Fed’s flood of cheap money, following the “Going Direct” blueprint, kept markets stable. So, seven months later, when the pandemic-driven shutdown cratered the U.S. economy, Congress and the Fed once again used BlackRock’s playbook – and hired the company to manage the Fed’s $750-billion program of government and corporate bond-buying, under which BlackRock could invest government money in its own exchange-traded bond funds, boosting their value, while taxpayers were on the hook to absorb any losses.
BlackRock also will make as much as $22 million in fees for managing the project.
Thirty nonprofit groups, including Public Citizen and Take on Wall Street, have sent a 27 March letter to Fed chair Jerome Powell, arguing, “By giving BlackRock full control of this debt buyout program, the Fed is further entwining the roles of government and private sectors. In doing so, it makes BlackRock even more systemically important to the financial system. Yet BlackRock is not subject to the regulatory scrutiny of even smaller systemically important financial institutions.”
BlackRock has since been hired by the central banks of Canada, Sweden, and Switzerland to help them design and manage their own plans to “go direct.”
BlackRock CEO Lawrence Fink reportedly has advised the European Central Bank that it “will need to purchase equities to stimulate Europe’s economy, and that leaders should find ways to have investors embrace an ‘equity culture’ there,” meaning governments should encourage people to buy stocks.
TRENDPOST: As the late, great George Carlin (we know his wonderful brother, Patrick) duly said, “It’s a big club, and you ain’t in it.”
From special tax breaks and grants to revolving doors between governments and corporations, the facts show the one percent “big club” insiders get bigger and richer as the rest of the population not only gets poorer… but are taxed for the money the Federal Reserve and governments give them.
