US, Treasury, and Fed collide over Covid help: This is how Trump wants to get in Biden’s way

For Democrats, this is another attempt by the administration. Triumph wanting to weaken and complicate the way to Biden. But the minister Steven Mnuchin defends the decision of the United States Treasury, which refuses to expand some of the tools of the fed to combat the effect COVID-19 in the economy and asks back $ 455 billion of unspent funds. An unexpected move that triggers a rare immediate reaction from the central bank, showing a crack in the front Treasury-Fed in helping the economy overwhelmed by the pandemic and which, already weak, faces a new wave of closures to try to contain the virus.

Steven Mnuchin defends the decision: the measures, as defined by the Congress, they expire at the end of the year and any other interpretation of their duration is incorrect. “The bazooka that remains available to the Fed is strong. The programs were successful and met their objectives, ”he says. Then he assures that behind the decision there is “no politics: it is not an attempt to hinder the next administration. We are applying the law ”. He then explains that the funds released from the fed can be better spent helping American people unemployed and small and medium enterprises.

His words, however, are not enough against the harsh and unusual immediate response of the fed, which for months has been preaching the need to move forward with measurements in effect: “We will get rid of him when the moment and it will not be soon, “said the president a few days ago. Jerome Powell. “We would prefer the full range of tools activated during the pandemic it continued to play the important role of safety net for our vulnerable and still struggling economy, ”the central bank said coldly.

Economists are also skeptical financial world. The US lists are weak for fear of the repercussions that the clash between fed me treasure it could take on the economy. The request for funds weakens the central bank’s ability to act. Among observers, there are those who point out that Mnuchin’s attitude contradicts one of the great economic “logics”, namely, that when you have a bazooka and everyone knows it, sometimes you don’t even need to use it. There awareness on the wide availability of fed Also for institutions non-bank has convinced the market give directly money because if I didn’t, there would be central bank. Therefore, the programs, although little used, have played the important role of securities that favored the proper functioning of the flow of credit. Now that the securities the reaction fails, remains to be defined and also depends on the advance of the virus.

The shock occurs in the context of the stalemate in negotiations in Congress of new stimuli to the economy. After weeks of interruption, the first contacts would have been restarted, but the result is uncertain. THE emergency shutdown decided in several states could boost Democrats me republicans to finally reach an agreement, leaving aside the politics and looking only atnational interest. But the result of the elections It could also have soured the spirits of the gods. conservatives. It sure hardened the position of Donald trump that, having not yet awarded victory a Biden, it would have little interest in bequeathing a healthy economy.