The Fed has engaged the market in a circle jerk, sucking funds in from the banking system by paying interest on reserves only to lend those funds out to the system via the alphabet soup programs. But rather than reinvigorating the credit markets, they are sucking the lifeblood out of them with these programs. The money goes into the system, then right back to the Fed via the buying of Treasuries, or depositing of funds at the Fed. Meanwhile the real economy is frozen out of this cycle, causing a worsening vicious cycle of deflation and liquidation.

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