Thread by @HoarseWisperer

Simplified, what the federal government did yesterday was make available $1.5 trillion dollars to buy back the government’s own debt from banks.

It is sort of like offering to buy back your own mortgage.

You wouldn’t be “handing out” anything.

1/

If you said to your bank “Hey, I owe you a lot of money which you can collect in the future or I can give you cash for it now” you aren’t *giving* them anything.

Paying your bills faster isn’t a handout.

2/

Bernie either doesn’t know what he is talking about or is lying on purpose for political purposes.

Neither is super helpful in the midst of a crisis where we already can’t trust the rhetoric out of the president.

3/3

I slightly oversimplified the explanation here. At the end of the day, even these buybacks are temporary. They allow banks to temporarily trade US debt for cash - and then trade back later.

Will it help? Not really probably.

Was it a handout? No.

p.s. anyone who wants to add to this, clarify, disagree or rebut, go right ahead.

Happy to revise where helpful/necessary.

Wait, a more helpful metaphor might be a pawn shop.

The Fed basically said to banks “Hey, if you need cash, you can pawn your guitar. I’ll give you cash for it now. As long as you pay me some interest, you can buy it back later. If you don’t, I keep the guitar.”

The benefit to banks is that they get cash now to use for other things AND get to buy back their guitar later... but they have to pay for that opportunity.

The benefit to the federal government is banks remaining stable during times when they need more cash on hand.