The Great Devaluation

1Parasite

On Tuesday, March 3, 2020, the world's financial markets watched in stunned silence as Federal Reserve Chairman Jerome Powell announced an emergency interest rate cut of 50 basis points to the Federal Funds overnight interbank lending rate. At the time the Fed Funds rate was at 1.75 percent and Dow Jones was trading at 26,703 points.

“My colleagues and I took this action to help the US economy keep strong in the face of new risks to the economic outlook. The fundamentals of the US economy remain strong.”

—Jerome Powell

Within minutes, the Dow Jones would sink over 1000 points. Powell's emergency move would ignite the most volatile few weeks in stock market history, causing the market whipsaw in 1000-point swings up and down in the coming days. As the week ended, what had been the highest flying stock market in history was monkey-hammered down over 10 percent and the rate on the “risk-free” 10-year Treasury had fallen to its lowest yield in history at nearly 0.3 percent. Unfortunately, this was just the beginning of a very long month.

President Trump, who for the first three years of his presidency had ridden the equity boom for all it was worth and had pinned his entire re-election campaign to the success of the economy in general and the height of the stock market specifically, seemed aloof to the situation. Weeks before, in February, he had enjoyed his highest ratings while in office as the stock market had boomed to all-time highs. On the night before the Fed's ...