By David Mashian
In March of 2020, the single biggest news event of the decade hardly got any news coverage, and that is the Federal Reserve just got rolled into the US Treasury Department. This happened in the midst of the COVID-19 pandemic, so such massive news got drowned out by Corona Virus news and concerns. Most people don’t know what the Federal Reserve is or was. To put it simply, The Fed was a privately-owned banking cartel owned by foreign and domestic wealthy banking families who controlled the economic system of the United States by controlling its money supply. With this single act, the US government now owns “The Fed” and has the ability to govern its own financial destiny without acquiescing to a third-party entity whose interests are not aligned with WE THE PEOPLE. We, through our elected officials, now control our own money supply. THAT IS HUGE!
This bodes well for our economic recovery as a result of the COVID-19 pandemic that paralyzed the US. President Trump, through the US Treasury, now has full control over spending money to stimulate economy. As a result, it looks that the US is at the start of a golden age.
With this new power, President Trump can stimulate the economy in the following ways:
- Historically Low Interest Rates – Interest rates will be maintained at zero until 2022 to be able to stimulate the economy through liquidity and cheap money. We will see continued purchases of homes and a boom in the refinancing of single-family residences – keeping more money in people’s pockets instead of interest payments.
- Easy Lending Standards and Lots of Stimulus Money – The Federal Government has already provided PPP loans, SBA COVID-19 Disaster Loan Assistance, unemployment benefits, and much more to keep people afloat while we work through the aftermath of this pandemic. There will be more to come, and since President Trump controls the Federal Reserve by way of the US Treasury, there are no obstacles.
Economic Forecast: We Had a Pause – Not a Crash
I believe we will bounce back soon, be it V-shaped or U-shaped recovery. We have a pro-business President who understands that small businesses are the backbone of the country. There will be lots of investment money available to businesses going forward. In fact, the new version of the Federal Reserve is establishing the Main Street Lending Program to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.
There are many factors that still hold true despite the Corona Virus lock down, including a strong jobs market and strong stock market.
- Strong Jobs Market – People (employers and employees) are eager to start work after being cooped up self-isolating for so long. Similarly, the employers looking to fill positions before the lock down are still looking to fill positions. Also, many of the people who could not work during the pandemic are basically on hold, and will be back at their jobs once the COVID-19 situation clears up. We saw a pretty fast bounce back with the first reopening, and it will things will bounce back again once the coast is clear of COVID-19 in this second wave.
- Stock Market Strong – The stock market is still strong, and did not suffer a meltdown as a result of the pandemic. Most importantly, people’s retirement funds are secure and confidence in the economy to go back to work is stable. This may largely be a product of unprecedented government and central-bank support, and a lack of compelling alternatives to equities.
Going Forward
MORE JOBS AND ECONOMIC STIMULUS COMING!
- USMCA Trade Deals Just Took Effect July 1 – The new United States-Mexico-Canada Agreement (USMCA) is a mutually beneficial win for North American workers, farmers, ranchers, and businesses. This will create more balanced, reciprocal trade that supports high-paying jobs for Americans and grows the North American economy.
- Huge Infrastructure Investments – The Trump administration is preparing an up to $1 trillion infrastructure package focused on transportation projects such as roads and bridges and 5G wireless infrastructure and rural broadband. All infrastructure improvements have the added benefit of creating secondary and tertiary jobs that support the initial infrastructure jobs.
- Elimination of Payroll Taxes Likely – President Trump is pushing to eliminate payroll taxes. This should boost the economy by putting more money into the pockets of Americans resulting in higher spending for goods and services, speedier repayment of debts, and a faster return to normalcy. This amounts to slightly higher real wages for workers at no higher cost to the employer.
We are in the midst of a recovery, and in the worst-case scenario if we don’t see a recovery, the Federal Reserve can still lower interest rates to negative. Yes, that’s right, negative interest rates. This sounds odd, but many countries around the world, such as Japan, Denmark and Switzerland, currently have negative interest rates. Similarly, right now, the Eurozone, Norway, Sweden, and Bulgaria are at 0% interest rate, with Israel, the United Kingdom, Canada and Australia being near 0%. It is a real possibility.
One thing is clear, we are in the midst of a paradigm shift, with a change of perception of money and how money is used and transferred. The power structures that controlled the economic and political systems have changed and more is to come. The once unimaginable is becoming real, and I see great progress for humanity and the planet as a result.
I hope you have found this newsletter helpful. Please feel free to contact me anytime.
Nationwide Real Estate Lending
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David Mashian
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