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The Two Trillion Dollars Question

By  Nov 4, 2008

Topics: Business & Management

Bloomberg reported today that the Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Where have $2,000,000,000,000 gone?

My guess is that most of the money was actually used to buy stocks on Wall Street. The Fed can't buy stocks directly, nor would the public approve of such a reckless move. Therefore, I suspect that a significant portion of this huge amount was used indirectly (via intermediary brokers) for buying stocks on Wall Street with the sole purpose of alleviating the colossal sellout of mid-October. The peculiar timing of that colossal spending and the Fed's refusal to comment suggests that this alleged camouflaged stock buying was meant to support the Republicans in the presidential elections. I have no evidence to back up this suspicion but the "irrational exuberance" that Wall Street manifested days before the elections has no other explanation I'm afraid.