The Paper
In August 2019, the BlackRock Investment Institute published a paper titled “Dealing with the next downturn: From unconventional monetary policy to unprecedented policy responses.” Its authorship was remarkable. Stanley Fischer — former Vice Chair of the Federal Reserve (2014–2017), former Governor and Chair of the Bank of Israel (2005–2013), former First Deputy Managing Director of the IMF — was listed alongside Philipp Hildebrand, former Chairman of the Swiss National Bank (2010–2012); Jean Boivin, former Deputy Governor of the Bank of Canada; and Elga Bartsch, Head of Macro Research at the BlackRock Investment Institute. Four authors, and between them they had sat at the helm of five of the world’s most consequential monetary institutions. They were writing in the private sector now, from inside the world’s largest asset manager.
The paper’s central argument was that conventional monetary policy had been exhausted. With interest rates at or near the zero lower bound across the major economies, the transmission mechanism that central banks depended upon — creating reserves, watching commercial banks lend, watching credit flow to firms and households — would be too slow, too uncertain, and too weak to respond to the next severe downturn. What was needed, the paper argued, was a qualitatively different kind of intervention. The central bank should “go direct”: in an emergency, it should fund government fiscal programs or household accounts through what the paper called a “standing emergency fiscal facility,” bypassing the commercial banking system entirely. Central bank money creation would flow to the real economy without the intermediation lag or credit constraints of commercial banks.
The paper was explicit that this arrangement would blur the traditional line between monetary and fiscal policy. It acknowledged the risk of what economists call “monetary financing” — the central bank directly underwriting government expenditure. It framed this not as a violation of sound governance but as a necessary evolution: the standard separation of powers between the central bank and the Treasury would need to be set aside under emergency conditions, with the mechanism designed to be automatic and rule-based rather than discretionary.
Fischer’s career arc makes him the most legible figure in the paper’s authorship. He had designed the frameworks he was now proposing to transcend. He had served at the institution — the Federal Reserve — whose independence the paper proposed to compromise. He had governed the Bank of Israel. He had run the IMF’s day-to-day operations during multiple sovereign debt crises. He had then joined BlackRock, the private firm that would, seven months later, be handed the keys to execute the very policy the paper described.
The paper did not invent the phrase “going direct.” But it formalized the concept into a policy prescription and attached that prescription to the institutional authority of its authors — people who had spent careers inside the central banks they were now advising how to behave differently.
The Repo Crisis
On September 16–17, 2019 — one month after the paper’s publication — the U.S. overnight repo market seized. The Secured Overnight Financing Rate (SOFR), which ordinarily trades within the Federal Reserve’s federal funds target range, spiked to 5.25%. Some individual repo transactions cleared above 10%. The Federal Reserve had not conducted open-market repo operations since 2008.
The immediate causes were mundane: a large quarterly corporate tax payment drained bank reserves on the same day as a $54 billion Treasury settlement for a new note auction, and the post-2008 regulatory regime — Basel III and Dodd-Frank — had incentivized large banks, particularly JPMorgan Chase, to hoard high-quality liquid assets rather than deploy them in the repo market even when rates were attractive. The collision of the two drained just enough from the system to freeze short-term dollar funding.
The New York Fed injected $53 billion on September 17. The operations expanded rapidly: $75 billion per night in overnight repo by late September, supplemented by $45 billion in 14-day term repos; $120 billion per night available by December; continued and expanded operations through early 2020. The scale of the response was without precedent in the post-2008 era.
The repo crisis revealed that the Federal Reserve’s years of quantitative tightening — reducing its balance sheet from approximately $4.5 trillion to $3.8 trillion between 2017 and 2019 — had drained bank reserves to a point of structural fragility. The “abundant reserves” regime that post-2008 central banking assumed was the new permanent condition turned out to be more brittle than anyone had publicly acknowledged.
Analysts in the Solari orbit, led by John Titus, would later read the repo crisis not merely as technical dysfunction but as a preview — evidence that the plumbing of short-term dollar funding was under stress months before any pandemic was declared, and that the justification for March 2020’s extraordinary measures had been pre-positioned in the market’s visible fragility. Whether the repo crisis was cause, context, or coincidence, it produced one tangible result: by early 2020, the Federal Reserve was already operationally accustomed to direct market intervention at scale.
The 48-Hour Implementation
On March 11, 2020, the World Health Organization’s Director-General, Tedros Adhanom Ghebreyesus, made the statement that would detonate the policy sequence: “We have therefore made the assessment that COVID-19 can be characterized as a pandemic.” This was not a formal IHR declaration — the operative public health emergency of international concern had been declared on January 30 — but a rhetorical characterization with enormous political and institutional force. It was the trigger the BlackRock paper had specified: emergency conditions, monetary policy exhausted, unprecedented response required.
The sequence that followed was not slow.
March 23, 2020 — Federal Reserve: unlimited QE and three new facilities. The Federal Open Market Committee announced it would purchase Treasury securities and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy” — an unlimited commitment. The prior week’s caps of $500 billion and $200 billion were dropped. The same press release established three new emergency credit facilities, all drawing on Treasury Exchange Stabilization Fund equity:
- The Primary Market Corporate Credit Facility (PMCCF) — to purchase newly issued corporate bonds directly from investment-grade companies.
- The Secondary Market Corporate Credit Facility (SMCCF) — to purchase outstanding corporate bonds and, crucially, “U.S.-listed exchange-traded funds whose investment objective is to provide broad exposure to the market for U.S. investment grade corporate bonds.”
- The Term Asset-Backed Securities Loan Facility (TALF) — to support asset-backed securities backed by consumer and small business loans.
The SMCCF’s ETF purchase authority was architecturally significant. Exchange-traded funds are products issued by asset managers. The largest issuer of investment-grade corporate bond ETFs in the United States was BlackRock’s iShares division.
March 24, 2020 — New York Fed hires BlackRock. The NY Fed’s published facility record states verbatim: “On March 24, 2020, the New York Fed retained BlackRock Financial Markets Advisory as a third-party vendor to serve as the investment manager for this facility.” BlackRock Financial Markets Advisory (FMA) — the firm’s consulting and advisory arm — was retained to manage both the PMCCF and the SMCCF. The stated rationale was BlackRock’s expertise in purchasing large volumes of corporate debt and its operational and technological capabilities.
The structural conflict was immediate and precisely specified. BlackRock FMA managed the Federal Reserve’s purchasing program. BlackRock’s asset management arm — iShares — issued the ETFs the program was authorized to buy. BlackRock’s legal separation of its advisory and fund businesses was real, but the economics were indivisible: when the Fed (via BlackRock FMA) purchased iShares ETFs, it channeled Fed-created money into products on which BlackRock’s asset management business collected ongoing management fees. The SMCCF’s terms capped single-ETF purchases at 20% of that ETF’s outstanding shares. The program ultimately purchased approximately $8.7 billion in ETFs before winding down on December 31, 2020. BlackRock’s iShares LQD (investment-grade corporate bond ETF) and iShares HYG (high-yield bond ETF) were among the top holdings.
Stanley Fischer had co-authored the paper that described this mechanism. He was a Senior Advisor at BlackRock when his firm was hired to implement it.
March 27, 2020 — CARES Act: the $454 billion backstop. The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27. Section 4003 of Title IV authorized the Treasury to use up to $454 billion from the Exchange Stabilization Fund for “loans, loan guarantees, and investments in support of the Federal Reserve’s lending facilities.” Section 4015 suspended normal ESF usage constraints during the national emergency. Section 4019 required disclosure of conflicts of interest but did not prohibit BlackRock’s dual role.
The SMCCF terms specified that the facility would “leverage the Treasury equity at 10 to 1 when acquiring corporate bonds of issuers that are investment grade.” This meant the $454 billion ESF backstop could theoretically support up to $4.54 trillion in Fed-created credit. The actual deployment was far smaller — the combined PMCCF and SMCCF size cap was $750 billion — but the authorization ceiling was enormous and the leverage mechanism made the Congressional number structurally misleading at face value.
What the CARES Act accomplished, in monetary terms, was precisely what the BlackRock paper had prescribed. The standard transmission path — Fed creates reserves, commercial banks lend, businesses and consumers receive credit — was bypassed. Instead: Fed creates reserves, BlackRock-managed SPV purchases corporate bonds and ETFs in the open market, large corporate issuers receive effectively zero-cost financing without passing through a commercial bank’s credit judgment. The paper had called this arrangement a “standing emergency fiscal facility.” The CARES Act provided its fiscal leg. The Fed’s Section 13(3) authority provided its monetary leg. BlackRock provided the operational management of the junction between the two.
The elapsed time from the WHO pandemic characterization to the signing of the CARES Act was sixteen days. The BlackRock paper was seven months old.
The Financial Coup Framing
Catherine Austin Fitts served as Assistant Secretary of Housing and Urban Development under George H.W. Bush and as President of Hamilton Securities Group, a HUD financial advisory firm, before a sustained legal confrontation with HUD and the Department of Justice forced her out. She has operated the Solari Report, an independent financial commentary and research service, since 2000. Her reading of March 2020 is direct: it was not a policy response to a pandemic. It was the execution of a design that had been waiting for an emergency trigger.
In 2017, Fitts collaborated with Mark Skidmore, an economics professor at Michigan State University, to analyze Treasury Department documents and Inspector General reports. Their research documented what they termed “undocumented adjustments” — accounting entries required to make federal books balance for which no authorized transaction could be identified. At the Department of Defense, the cumulative total of such adjustments from fiscal year 1998 through 2015 was $21 trillion. At the Department of Housing and Urban Development, additional undocumented adjustments ran into the hundreds of billions. Following Skidmore’s research gaining public attention, the Defense Finance and Accounting Service removed the relevant Inspector General reports from its website. The Pentagon conducted its first-ever agency-wide audit in 2018 — the year after Skidmore published — and failed it. The DOD has failed every annual audit since.
Fitts’s framing organizes the sequence in two phases. Phase One (1998–2015): systematic extraction of capital from public balance sheets through fraudulent accounting practices, moving funds outside traceable institutional authority. Phase Two (2020 onward): use of COVID emergency powers to implement Going Direct — merging fiscal and monetary policy under private management via BlackRock, creating a new architecture in which money creation is directed by the same financial networks that benefited from Phase One’s extraction. The emergency is not the cause of the response. The emergency is the occasion for executing a pre-planned structural change.
John Titus, an attorney and financial researcher operating the Best Evidence channel, approached the same events through reserve accounting rather than forensic accounting. His analysis — developed in collaboration with Fitts’s Solari Report and most fully articulated in “All the Plenary’s Men” (2021) — argued that the March 2020 operations constituted a qualitative shift in who exercises monetary power. Before March 2020, the Federal Reserve created reserves and influenced the economy through the commercial banking system; banks amplified or dampened the monetary signal through their own lending decisions. After March 2020, the Fed became a direct purchaser of corporate debt. Money created at the Fed no longer passed through commercial bank credit judgment. It went directly to the corporate bond market, with the specific direction of that flow determined by whoever controlled the BlackRock-managed SPVs. The question Titus kept asking was: who benefits from the direction the money took? The answer was not households or small businesses. The PMCCF — the facility designed to purchase primary market corporate issuance — effectively never deployed. The SMCCF purchased secondary-market bonds and BlackRock ETFs. The capital flow benefited large corporations and the asset management industry’s fee structures. The commercial banks, whose credit intermediation was nominally being bypassed to help the real economy, largely sat out the program.
Titus’s evidence base was the same set of primary sources the Fed and Treasury published themselves: Federal Reserve H.4.1 balance sheet data, the NY Fed’s facility terms and conditions, the CARES Act enrolled text. His interpretive frame — that what happened was a structural power transfer, not an emergency policy measure — is a reading of established facts rather than a departure from them.
The ESF itself is worth pausing on. The Exchange Stabilization Fund was created by the Gold Reserve Act of 1934, funded by the revaluation profit Franklin Roosevelt captured when he repriced gold from $20.67 to $35 per ounce the morning after signing the Act. That $2.8 billion windfall became a Treasury reserve outside normal congressional appropriation processes, usable by the Treasury Secretary with minimal oversight. In 1934 it was the instrument of a monetary revaluation. In 2020 it was the instrument of a fiscal-monetary fusion. In both cases the mechanism required no FOMC vote and no standard congressional appropriation. The architecture of emergency Treasury action runs through the same 1934 tool across nearly ninety years.
The Bridge to the Stablecoin Architecture
The March 2020 operations were officially temporary. The SMCCF wound down December 31, 2020. The NY Fed notified BlackRock of contract termination on January 6, 2021, effective February 5, 2021. The legal structure was dismantled.
The institutional pathway it opened was not.
The Going Direct episode established several precedents that had not previously existed in the post-New Deal monetary order. The Federal Reserve, for the first time in its history, became a direct purchaser of corporate debt in the open market. The Treasury’s Exchange Stabilization Fund became the equity backstop for Federal Reserve lending facilities — a merger of the two institutions’ balance sheets under emergency conditions that the BlackRock paper had described as the required structural feature of the new architecture. A private asset manager, operating under government contract, made the day-to-day portfolio decisions about what the Federal Reserve purchased with newly created money. And Congress, in the CARES Act, authorized an amount sufficient to backstop $4.54 trillion in Fed credit — more than twice the Fed’s then-existing balance sheet — under conditions that could be re-triggered by any future declaration of national emergency.
The GENIUS Act — the Guiding and Establishing National Innovation for US Stablecoins Act, signed July 18, 2025 — represents the next structural step in the same architectural trajectory. Under GENIUS, regulated stablecoin issuers maintain one-to-one reserves in short-dated Treasury bills, Treasury notes and bonds with remaining maturity of 93 days or less, or equivalent government money-market instruments. The mechanism the GENIUS Act establishes for the global dollar system is structurally analogous to what BlackRock’s SPVs did in 2020, but codified, permanent, and operating at potentially multi-trillion-dollar scale.
The 2020 sequence showed that a non-bank entity — a BlackRock-managed special purpose vehicle — could hold a direct claim on the Federal Reserve’s balance sheet and direct the flow of newly created money without passing through commercial bank intermediation. The GENIUS Act generalizes this principle. Permitted payment stablecoin issuers are not commercial banks. Their reserves are held in short-dated Treasuries, not commercial bank deposits, and their regulatory framework is distinct from the bank regulatory perimeter. Yet they issue dollar-denominated instruments that circulate globally as money. They occupy, institutionally, something like the position the 2020 SPVs occupied — entities with direct relationships to the monetary base that are not banks in the traditional sense.
BlackRock is not absent from the 2025 architecture. The BUIDL tokenized money-market fund — BlackRock’s flagship tokenized asset product, launched March 2024 and comprising approximately 40% of the tokenized Treasury fund market by late 2024 — holds exactly the short-dated Treasury instruments that qualify as GENIUS-compliant stablecoin reserves. Circle, the issuer of USDC (the second-largest stablecoin by market capitalization), holds a substantial fraction of its reserves in BlackRock’s Circle Reserve Fund, a BlackRock-managed SEC-registered government money-market fund. The firm that co-authored the Going Direct paper, managed the Federal Reserve’s emergency corporate bond purchases, and collected management fees on the ETFs those purchases drove — that firm is structurally embedded in the reserve infrastructure of the new dollar architecture at the point of regulatory implementation.
The continuity is not conspiratorial in the sense of requiring a hidden plan. It is institutional: the same firm that had the deepest relationships with central bank infrastructure in 2019 retained and extended those relationships through every subsequent layer of the architecture. Going Direct was not merely a crisis-response policy. It was a proof of concept — evidence that a private firm could manage a central bank’s balance sheet at scale, that the fiscal and monetary arms of government could be fused under emergency conditions, and that the resulting structure could direct money creation with a precision and speed that the traditional commercial banking transmission mechanism could not match. The GENIUS Act’s stablecoin framework is the non-emergency, permanent, statutory version of the same demonstration.
The CARES Act’s Section 4015 suspended normal ESF restrictions during a “national emergency” — a phrase that can be re-triggered. The mechanism established in March 2020 is dormant, not dismantled. Its emergency character was its legal justification, not its permanent state. What the GENIUS Act does is remove the requirement for an emergency: the architecture the crisis licensed in 2020 is being codified as the architecture the law requires in 2025. The distinction between emergency improvisation and permanent design is the distance between those two dates.
The COVID Working is the page where the pandemic’s operational machinery is documented. The Monetary Transition Architecture is the page where the 2025–2026 legislative-and-executive sequence is mapped. The Going Direct Reset is the mechanism that connects them: the specific operation by which the emergency of March 2020 was used to execute a monetary-architecture change that the BlackRock Investment Institute had specified in writing seven months earlier, and that the GENIUS Act now extends into the permanent statutory order.
References
Primary Sources
- BlackRock Investment Institute. “Dealing with the next downturn: From unconventional monetary policy to unprecedented policy responses.” August 2019.
blackrock.com/corporate/literature/whitepaper/bii-macro-perspectives-august-2019.pdf - Federal Reserve Board Press Release, March 23, 2020 — PMCCF, SMCCF, TALF announcements; unlimited QE commitment.
federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm - New York Federal Reserve Bank, PMCCF Facility Page — verbatim: “On March 24, 2020, the New York Fed retained BlackRock Financial Markets Advisory as a third-party vendor to serve as the investment manager for this facility.”
newyorkfed.org/markets/primary-market-corporate-credit-facility - New York Federal Reserve Bank, SMCCF Terms and Conditions — ETF purchase authority; 10:1 leverage on investment-grade bonds.
newyorkfed.org/markets/secondary-market-corporate-credit-facility/secondary-market-corporate-credit-facility-terms-and-conditions - CARES Act Enrolled Text (H.R. 748, 116th Congress) — Section 4003 ($454B ESF authorization), Section 4015 (ESF restriction suspension), Section 4019 (conflicts of interest disclosure).
congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf - Gold Reserve Act of 1934, 48 Stat. 337 — created the Exchange Stabilization Fund via gold revaluation windfall.
- WHO Director-General opening remarks, March 11, 2020 — “COVID-19 can be characterized as a pandemic.”
who.int/news-room/speeches/item/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020 - Pentagon Inspector General Report, November 2018 — DOD failed its first-ever agency-wide audit.
- GENIUS Act (S. 1582, Public Law 119-27), signed July 18, 2025 — stablecoin reserve requirements at §4(a)(1).
Secondary and Analytical Sources
- Skidmore, Mark. “Has Our Government Spent $21 Trillion of Undocumentable Transactions Since 1998?” Michigan State University / Solari Report, 2017. Peer-reviewed version in Journal of Government Financial Management, Vol. 66, No. 3 (Fall 2017).
- Titus, John. “All the Plenary’s Men.” Best Evidence / Solari Report, 2021.
youtube.com/c/BestEvidence - Fitts, Catherine Austin. Solari Report analyses on the Going Direct Reset, 2020–2022.
solari.com - New York Federal Reserve Bank, Repo Operations historical data.
newyorkfed.org/markets/desk-operations/repo - Federal Reserve Board, H.4.1 weekly balance sheet releases, 2020.