Bloomberg ETF analyst: Federal Reserve may buy stock ETFs in the future, US stocks are too big to fail.

Odaily Planet Daily News—Bloomberg ETF analyst Eric Balchunas said in a post on X that he released today a report he has been thinking about for months. The report suggests that the U.S. stock market may have become too large and too important, essentially functioning as America’s retirement fund, and could even become a source to rescue Social Security, which is expected to run out of funds in less than 10 years. Currently, 55% of Americans hold stocks, the highest level in the world; with Trump Accounts bringing an additional 28 million Americans into the pool of stockholders, the vast majority—including the top 1% who hold half of the U.S. stock market, the middle class, and low-income groups—will have a financial stake in the health of the stock market. And since they are all voters, the political pressure to keep the stock market from falling into a prolonged bear market will be very strong.

Eric Balchunas believes the Federal Reserve is likely to buy stock ETFs in the next major downturn to support the market, and that this will become a common practice going forward. He said China and Japan have already done this, and the Fed may even lock in specific industries or capital expenditure companies by buying their shares. He said this is a huge variable, but there is a blind spot among the expert community as well—one reason short-sellers are repeatedly suppressed. Investors have already recognized this, as shown by the continued inflows of ETF funds during market pullbacks, and by a survey of 1,000 people in which three-quarters of respondents believe the Federal Reserve will come to the rescue of the market in the next crisis. He said this is only one of the byproducts of global, especially U.S., expansion of the money supply and expansion of debt, which currently appears irreversible.