The Federal Reserve has become deeply invested in corporate bonds, asset-backed securities, commercial paper, and exchange-traded funds, despite regulations prohibiting those measures. Theoretically, the Fed is only allowed to purchase or lend against securities that have government guarantees. However, the Treasury, financed by the Fed, now is buying securities and backstopping loans. In short, the federal government is nationalizing large swaths of the financial markets, and the Fed is creating the money to do it. The Fed announced $1-trillion a day in repurchase agreements (repo loans) and unlimited quantitative easing. -GEG

The economic debate of the day centers on whether the cure of an economic shutdown is worse than the disease of the virus.  Similarly, we need to ask if the cure of the Federal Reserve getting so deeply into corporate bonds, asset-backed securities, commercial paper, and exchange-traded funds is worse than the disease seizing financial markets. It may be.

In just these past few weeks, the Fed has cut rates by 150 basis points to near zero and run through its entire 2008 crisis handbook. That wasn't enough to calm markets, though — so the central bank also announced $1 trillion a day in repurchase agreements and unlimited quantitative easing, which includes a hard-to-understand $625 billion of bond buying a week going forward. At this rate, the Fed will own two-thirds of the Treasury market in a year.