September 20, 2019 - Tom Coulson, Liberty Coin Service owner and CEO, terms this week’s actions and statements by Federal Reserve officials as indicating a major risk of a near-term U.S. economic downturn.
Said LCS CEO and owner Tom Coulson, “On Tuesday, the Federal Reserve stepped in to inject liquidity into the bank overnight loan market by purchasing U.S. Treasury debt from banks. The liquidity crunch in this market was so extreme that the annual interest rate on overnight bank loans spiked to 10% by Tuesday morning. The Federal Reserve injected $53 billion into this market on Tuesday and another $75 billion on Wednesday. Such a move almost always signifies major distress in the U.S. banking system. The last time the Federal Reserve took such actions was in 2008, during the Great Recession, when banks were so afraid of possible failure by other banks that they were averse to lending overnight money to other banks.”
Coulson continued, “Second, on Wednesday, as expected, the Federal Open Market Committee (FOMC) announced another reduction in the federal funds' interest rate. Such interest rate cuts do not occur unless there are concerns about a downturn in the U.S. economy. But third and fourth, and most worrisome, are statements given by Federal Reserve Chair Jerome Powell in the press conference Wednesday afternoon during which he announced the FOMC interest rate decision. Powell tried to attribute part of the bank liquidity crisis to massive cash withdrawals from bank accounts to pay Sept. 15 tax estimates (Sept. 16 this year because the 15th was on the weekend). I don’t believe this to be valid as such withdrawals occur annually every September 15th and did not cause this extent of bank liquidity problems in the decade from 2009 through 2018. Lastly, when Powell said, ‘It is certainly possible we will need to resume the organic growth of the balance sheet sooner than we thought,’ that refers to actions taken by the Fed during the Great Recession to try to end an existing major economic slowdown. Combining these Fed actions and comments, which almost none of the regular media are doing, you can detect a major risk of a near-term economic downturn, not only in America but worldwide.
In a Sept. 18 news story about the Fed liquidity injections on cable news station CNN, reporter Matt Egan wrote, “Still, the fact the Fed needed to pump $128 billion into the system on successive days shows that a crack has emerged in a seldom-discussed corner of Wall Street that is central to the global financial system.”
Coulson also noted that one outcome of the Great Recession last decade was a major boom in gold and silver prices.
Frequently-honored Liberty Coin Service, founded in 1971, is Michigan’s largest rare coin and precious metals dealership. The company provides important but often little-reported information to customers, subscribers and the general public in its monthly newsletter, Liberty’s Outlook posted at www.libertycoinservice.com, in LCS Communications Officer Patrick A. Heller’s weekly columns posted at NumismaticNews.net and other websites, and in Heller’s radio commentaries on Wednesday and Friday mornings on 1320-AM WILS under the title of “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know.” Liberty Coins, as it is known locally, has been located in Lansing’s Frandor Shopping Center since 1975.