Mnuchin’s Fed move is like stripping Titanic of its lifeboats, economist says

By Elliot Smith
Nov 20 2020

U.S. Treasury Secretary Steven Mnuchin’s decision to allow key pandemic relief programs to expire is like stripping lifeboats from the Titanic, according to Carl Weinberg, chief economist at High Frequency Economics.

Mnuchin announced Thursday that he will not extend the Federal Reserve’s emergency lending programs that used Congress’ CARES Act funds beyond Dec. 31. The move is expected to drastically reduce the central bank’s ability to shore up the financial system.

The announcement comes as many areas of the country reimplement partial lockdown restrictions in a bid to contain the resurgent coronavirus. The national seven-day average of daily new infections has reached 161,165, according to a CNBC analysis of John Hopkins University data, 26% higher than a week ago. California has ordered a 10 p.m. curfew across much of the state, while New York City has announced the closure of schools.

Speaking to CNBC’s “Squawk Box Europe” on Friday, Weinberg suggested that it was difficult to find an “economic rationale” for the decision, with millions of Americans still receiving unemployment benefits, regional Fed indicators softening and further shutdowns likely on the horizon.