Republican Presidential Nominee Donald Trump blasted the Federal Reserve and Fed chair Janet Yellen for being more “political” than his Democratic counterpart Hillary Clinton in Monday night’s heated presidential debate.
Is he right? Is the Federal Reserve political in any way, shape or form?
Fed officials, the vast majority of political analysts, and “a wide range of independent observers,” according to the New York Times, “roundly rejected” Mr. Trump’s “accusation.”
But the truth is, the Federal Reserve is absolutely, positively political. It’s in their DNA.
I’ll prove it to you…
Starting October 14, 2016, institutional prime money market funds won’t be able to price themselves at a constant $1.00 a share.
New SEC rules will require these giant funds to value shares based on actual market prices for underlying assets in their portfolios.
That means their per-share prices will fluctuate on a daily basis.
While that’s not exactly good news, it gets worse.
The rules allow funds to charge up to a 2% redemption fee when investors want out.
But the killer is, funds can put up “gates” that prevent investors from selling shares.
Besides problems investors will have with the new rules, unintended consequences affecting companies and municipalities that rely on selling their commercial paper and other short-term debt instruments to these big funds could end up killing the market.
Here’s what you need to know, and what to do…