Beginning on March 24 of this year, Larry Kudlow, the White House Economic Advisor, began to roll out the most deviously designed bailout of Wall Street in the history of America. After the Federal Reserve’s secret $29 trillion bailout of Wall Street from 2007 to 2010, and the exposure of that by a government audit and in-depth report by the Levy Economics Institute in 2011, Kudlow was going to have to come up with a brilliant strategy to sell another multi-trillion-dollar Wall Street bailout to the American people.
The scheme was brilliant (in an evil genius sort of way) and audacious in employing an Orwellian form of reverse-speak. The plan to bail out Wall Street would be sold to the American people as a rescue of “Main Street.” It was critical, however, that all of the officials speaking to the media repeat the words “Main Street” over and over.
It was decided that Larry Kudlow would first announce the plan at the White House press briefing on March 24 followed by an unprecedented appearance of Fed Chairman Jerome Powell on the Today show on March 26.
This is how Kudlow explained the program that was going to be tucked into the stimulus legislation known as the CARES Act at the White House press briefing on March 24:
Kudlow: “This package will be the single largest Main Street assistance program in the history of the United States. Phase Two delivered the sick leave for individuals, hourly workers, families and so forth. Phase Three – a significant package for small businesses, loan guarantees will be included. We’re gonna take out expenses and lost revenues…And, finally, I want to mention the Treasury’s Exchange Stabilization Fund. That will be replenished. It’s important because that Fund opens the door for Federal Reserve firepower to deal in a broad-based way throughout the economy for distressed industries, for small businesses, for financial turbulence. You’ve already seen the Fed take action. They intend to take more action. And in order to get this we have to replenish the Treasury’s emergency fund. It’s very, very important. Not everybody understands that…
“So, the total package here comes to roughly $6 trillion: $2 trillion direct assistance, roughly $4 trillion in Federal Reserve lending power. Again, it will be the largest Main Street financial package in the history of the United States. Liquidity and cash for families, small business, individuals, unemployed, to keep this thing going. We’re heading for a rough period but it’s only gonna be weeks we think. Weeks, months. It’s not gonna be years, that’s for sure.”
In fact, when the dust settled, the bailout of Wall Street was structured to run 4 to 5 years while the extra $600 a week added to unemployment claims for workers was going to last four months.
To further prepare the public in case mainstream media caught on to what was really going on and pushed back, Fed Chairman Powell made an unprecedented appearance on the Today show on March 26 and explained the plan like this:
Powell: “In certain circumstances like the present, we do have the ability to essentially use our emergency lending authorities and the only limit on that will be how much backstop we get from the Treasury Department. We’re required to get full security for our loans so that we don’t lose money. So the Treasury puts up money as we estimate what the losses might be…Effectively $1 of loss absorption of backstop from Treasury is enough to support $10 of loans.”
The Fed was created in 1913 under the Federal Reserve Act. There is nothing, whatsoever, in the 107-year history of the Fed that states or even suggests that it can lever up taxpayer money by 10 to 1 to bail out Wall Street and stick the taxpayer with the losses. This was an outrageous plan hatched out of thin air by Kudlow, Powell and U.S. Treasury Secretary Steve Mnuchin with zero regard for the legality of the plan.
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