Its special purpose vehicle to buy three-month commercial paper direct from top-quality issuers may well be used extensively by banks, but it also makes the Fed a direct lender to industrial corporations. That raises the question: if the banks are failing in their function to provide short-term cash loans to the broader economy, then what is the point of them? The logic of the vehicular finance system – whereby banks originated garbage assets and then created spurious structured vehicles to sell them to – is that banks become detached from the real economy.
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