In our post-QE world, the Fed is assuming a greater role
Bourne out of necessity
Let me indulge the reader with some speculation.
The Fed is establishing its Bank Term Funding Program (BTFP), which will essentially guarantee ALL member bank deposits. The FDIC could have never offered this backing; its balance sheet is way too small.
If the concept of the Central Bank digital currency (CBDC), operated by the Federal Reserve with government approval, is ever going to come to fruition, the FED has to back it all anyway.
For the conspiracy scientists out there, I submit for contemplation that the BTFP is the first step in the CBDC creation process.
Instead of the FDIC backing the deposits with approval from the federal government for funding its balance sheet, the FED relegates the FDIC as the defacto administrator of any insolvency. To me, it seems that the FDIC has been pushed aside and the FED has assumed the FDIC’s powers.
The FED takes over traditional government powers while the scared people wonder about collapse.
The more I ponder it today, the more I am realizing that all this was formulated long ago out of necessity and was sitting in the can waiting for the opportune moment to roll out.
As the federal government continues to spend more and more, the Federal Reserve out of necessity will need to assume more of these fiscal powers in order to keep the system going post QE.
To wit, recent catalysts over the past week with SIVB and SBNY necessitated the Fed to assume an ever larger presence in the banking system and take over the FDICs role. By doing so, banks like WAL and FRC can remain in business despite flash mob shorting and bank runs. This is because the government is too flaccid, emasculated, partisan, and ineffectual to embark on such ambitious projects where a central authority is needed to act forcefully and decisively.
So, if we are to see a central bank digital currency, the Fed will have to slowly assume the government’s role and will have to assume more unilateral power in establishing its presence over the bank depositor and consumer with regards to all transactions and deposit guarantees.
While the Fed only obliquely refers to CBDCs, it is establishing and building the necessary framework from behind the scenes. Meanwhile, the conspiracy scientists are worrying about collapse and are redirected from what is taking place right under their noses.