Going Direct joined fiscal distribution to central-bank money creation through an emergency template. March 2020 gave that template an operating body. The Monetary Transition Architecture follows how the resulting capacity entered durable digital-dollar infrastructure.
The Paper
In August 2019, the BlackRock Investment Institute published “Dealing with the next downturn: From unconventional monetary policy to unprecedented policy responses.” Four authors brought careers inside five major monetary institutions to the world’s largest asset manager.
Stanley Fischer had been Federal Reserve Vice Chair from 2014 to 2017. He had governed and chaired the Bank of Israel from 2005 to 2013 and served as the IMF’s First Deputy Managing Director. The IMF is the International Monetary Fund.
Philipp Hildebrand had chaired the Swiss National Bank from 2010 to 2012. Jean Boivin had been Deputy Governor of the Bank of Canada. Elga Bartsch headed macro research at the BlackRock Investment Institute.
Their argument began with exhausted conventional monetary policy. Interest rates stood at or near the zero lower bound across major economies, leaving little room for further reductions. Central banks normally created reserves and relied on commercial banks to turn that capacity into lending. Credit then reached firms and households through the banks’ decisions. The authors judged this route too slow, uncertain, and weak for the next severe downturn.
The proposed alternative was to “go direct”. Under emergency conditions, central banks would fund fiscal programs or household accounts through a “standing emergency fiscal facility,” bypassing commercial banks. Money creation would reach the real economy without commercial-bank credit constraints or the delay of intermediation.
The paper acknowledged that this would blur monetary and fiscal policy. It named the risk “monetary financing”: central-bank underwriting of government expenditure. The authors presented the change as a necessary evolution in governance. Emergency conditions would set aside the normal separation between the central bank and Treasury. An automatic, rule-based mechanism would govern the intervention.
Fischer made that institutional reversal especially visible. He had helped design the frameworks he now proposed to transcend. He had served at the Federal Reserve, whose independence the proposal would compromise. At the IMF, he had directed daily operations through sovereign debt crises. He then joined the private firm that received the assignment to implement the design seven months later.
The paper did not invent the phrase “going direct.” It formalized a prescription and attached the authors’ institutional authority to it. Former central-bank leaders now advised those institutions from inside a private asset manager.
The Repo Crisis
The overnight repurchase market seized on September 16–17, 2019, one month after publication. Repo supplies short-term dollar funding through transactions backed by securities. The Secured Overnight Financing Rate, or SOFR, normally traded within the Federal Reserve’s federal funds target range. It spiked to 5.25%, while some individual transactions cleared above 10%. The Fed had not conducted open-market repo operations since 2008.
Two ordinary funding demands collided. Quarterly corporate tax payments drained bank reserves on the day a new Treasury note auction required a $54 billion settlement. Basel III and Dodd-Frank rules had encouraged large banks to retain high-quality liquid assets. JPMorgan Chase was particularly important in that arrangement. Banks withheld those assets from repo even when attractive rates offered a return. The combined drain froze short-term dollar funding.
The New York Fed injected $53 billion on September 17. By late September, overnight operations supplied $75 billion per night, supplemented by $45 billion in fourteen-day term repos. Available overnight funding reached $120 billion per night by December. Operations continued and expanded into early 2020. Their scale exceeded the earlier post-2008 response.
Quantitative tightening had reduced the Fed’s balance sheet from approximately $4.5 trillion to $3.8 trillion between 2017 and 2019. Bank reserves fell with it, exposing structural fragility. The supposedly permanent “abundant reserves” regime proved more brittle than public accounts had acknowledged.
John Titus and other analysts around Solari later read this dysfunction as a preview. Short-term dollar funding was visibly strained before the pandemic, pre-positioning a justification for extraordinary intervention. That interpretation leaves the crisis’s role as cause, context, or coincidence distinct. Its concrete result was operational experience: by early 2020, the Fed was accustomed to direct market intervention at scale.
The 48-Hour Implementation
On March 11, 2020, WHO Director-General Tedros Adhanom Ghebreyesus delivered the characterization that activated the political sequence:
“We have therefore made the assessment that COVID-19 can be characterized as a pandemic.”
The operative public health emergency of international concern had been declared on January 30. The March statement was a rhetorical characterization, not a formal declaration under the International Health Regulations. It nevertheless carried enormous institutional force. The BlackRock paper’s emergency conditions now had a public form: exhausted monetary policy faced an event requiring unprecedented action.
On March 23, the Federal Open Market Committee, or FOMC, announced unlimited quantitative easing, or asset purchases funded through the central bank. Its commitment covered Treasury securities and agency mortgage-backed securities:
“in the amounts needed to support smooth market functioning and effective transmission of monetary policy”
The preceding week’s $500 billion and $200 billion caps disappeared. The same release established three emergency credit facilities using Treasury Exchange Stabilization Fund equity. That equity supplied a fiscal backstop for central-bank lending.
The Primary Market Corporate Credit Facility, or PMCCF, would buy newly issued bonds directly from investment-grade companies. The Secondary Market Corporate Credit Facility, or SMCCF, would purchase outstanding corporate bonds and specified exchange-traded funds, or ETFs. Its authority included:
“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, or TALF, supported securities backed by consumer and small-business loans. Each facility addressed a different funding route. The SMCCF also placed asset managers’ products inside the central bank’s purchasing authority. BlackRock’s iShares division was the largest US issuer of investment-grade corporate bond ETFs.
The New York Fed’s record gives the next day’s assignment:
“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, or FMA, managed both corporate facilities. The Fed cited expertise in purchasing large volumes of corporate debt, together with operational and technological capabilities.
FMA managed the purchasing program while iShares issued ETFs that the program was authorized to buy. The firm’s advisory and fund businesses were legally separate. Their economics still met inside the purchases. Fed-created money entered products on which BlackRock’s asset-management business collected continuing management fees.
SMCCF terms capped purchases of any single ETF at 20% of its outstanding shares. The program ultimately purchased approximately $8.7 billion in ETFs before winding down on December 31, 2020. Its top holdings included iShares LQD, an investment-grade corporate bond ETF, and iShares HYG, a high-yield bond ETF. Fischer was a BlackRock Senior Advisor when the firm received the assignment. The co-author’s employer now operated the mechanism he had prescribed.
The Coronavirus Aid, Relief, and Economic Security Act became law on March 27. Section 4003 of Title IV authorized 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 conflict-of-interest disclosures without prohibiting BlackRock’s dual role.
The SMCCF’s terms specified leverage:
“leverage the Treasury equity at 10 to 1 when acquiring corporate bonds of issuers that are investment grade.”
At that ratio, a $454 billion backstop theoretically supported $4.54 trillion in Fed-created credit. Actual deployment was far smaller. The combined PMCCF and SMCCF size cap was $750 billion. The authorization ceiling, facility cap, and deployed amount describe different quantities. Leverage made Congress’s headline authorization structurally misleading when read at face value.
The CARES Act supplied the fiscal leg of the design. Federal Reserve Section 13(3) authority supplied its monetary leg. BlackRock managed their junction through a special purpose vehicle, or SPV: a separate entity operating the facility. Fed-created reserves financed purchases of corporate bonds and ETFs in the open market. Large issuers obtained effectively zero-cost financing without a commercial bank’s credit judgment.
The paper had named the arrangement a “standing emergency fiscal facility.” That arrangement now had an institutional body. Sixteen days separated the WHO characterization from the CARES Act. The written blueprint was seven months old.
The Financial Coup Framing
Catherine Austin Fitts had served as Assistant Secretary of Housing and Urban Development under George H. W. Bush. She later led Hamilton Securities Group, a HUD financial advisory firm. A sustained legal confrontation with HUD and the Department of Justice forced her out. Since 2000, she has operated the Solari Report as an independent financial commentary and research service.
Fitts reads March 2020 as execution of a design awaiting an emergency trigger. Her account places the crisis inside a longer movement of public capital and monetary authority.
In 2017, she collaborated with Michigan State University economics professor Mark Skidmore to examine Treasury documents and Inspector General reports. They identified “undocumented adjustments”: entries used to balance federal accounts without an identifiable authorized transaction. Department of Defense adjustments totaled $21 trillion cumulatively across fiscal years 1998–2015. Additional HUD adjustments reached hundreds of billions.
After the research gained public attention, the Defense Finance and Accounting Service removed the relevant Inspector General reports from its website. The Pentagon’s first agency-wide audit occurred in 2018, one year after publication, and failed. The Department of Defense has failed every annual audit since.
Fitts interprets the sequence through two phases. From 1998 to 2015, fraudulent accounting extracted capital from public balance sheets and moved it beyond traceable institutional authority. From 2020 onward, COVID emergency powers implemented Going Direct under BlackRock’s private management. In her account, the same financial networks benefited from extraction and then gained direction over money creation. The emergency supplied the occasion for a prepared structural change.
John Titus approached the transfer through reserve accounting. The attorney and financial researcher operates Best Evidence and developed his analysis with Solari. “All the Plenary’s Men” (2021) presents his account most fully.
Before March 2020, the Fed created reserves while commercial banks amplified or dampened the resulting credit through lending decisions. The corporate purchases changed that route. Newly created money reached the bond market without commercial-bank credit judgment. BlackRock-managed SPVs controlled the particular direction of the flow. Titus’s question concerns who benefited from that direction.
The PMCCF, designed to purchase primary issuance, effectively never deployed. The SMCCF bought secondary-market bonds and BlackRock ETFs. Large corporations and asset-management fee structures benefited, while households and small businesses were not the direct beneficiaries. Commercial banks largely sat out a program presented as bypassing their intermediation for the real economy.
Titus used the institutions’ own primary records: Federal Reserve H.4.1 balance sheets, New York Fed facility terms, and the enrolled CARES Act. His interpretation identifies a structural transfer of monetary power within those established operations.
The ESF carried an older emergency architecture. The Gold Reserve Act of 1934 created it from gold revaluation proceeds. The morning after signing, Franklin Roosevelt repriced gold from $20.67 to $35 per ounce. The $2.8 billion gain became a Treasury reserve outside normal congressional appropriations, available to the Treasury Secretary with minimal oversight.
The same fund carried monetary revaluation in 1934 and fiscal-monetary fusion in 2020. Neither mechanism required an FOMC vote or a standard congressional appropriation. Emergency Treasury action retained its vessel across nearly ninety years.
The Bridge to the Stablecoin Architecture
The SMCCF ended on December 31, 2020. The New York Fed notified BlackRock of contract termination on January 6, 2021, effective February 5. The temporary legal structure closed, while the institutional pathway remained available.
Going Direct established four precedents in the post-New Deal order. For the first time, the Fed directly purchased corporate debt in the open market. Treasury ESF equity backed Federal Reserve facilities, joining their balance sheets under emergency conditions. A contracted private asset manager made daily portfolio decisions about purchases funded with newly created money. Congress authorized a backstop capable of supporting $4.54 trillion, more than twice the Fed’s then-existing balance sheet. Another emergency declaration supplies the conditions for reactivation.
The Guiding and Establishing National Innovation for US Stablecoins Act, or GENIUS Act, became law on July 18, 2025. It gives the same architectural trajectory a statutory form. Regulated stablecoin issuers maintain one-to-one reserves in short-dated Treasury bills, eligible notes and bonds, or equivalent government money-market instruments. Eligible Treasury notes and bonds have remaining maturities of ninety-three days or less. The resulting system operates permanently and at potentially multi-trillion-dollar scale.
The analogy concerns nonbank institutions’ position within dollar infrastructure. In 2020, a BlackRock-managed SPV held a direct claim on the Fed’s balance sheet and directed newly created money. Permitted payment stablecoin issuers likewise operate outside traditional commercial-bank intermediation. Their reserves sit in short-dated Treasuries, not commercial-bank deposits, under a distinct regulatory perimeter. They issue dollar-denominated instruments that circulate globally as money. Their Treasury-backed position supplies the institutional analogue to the emergency SPVs.
BlackRock’s BUIDL tokenized money-market fund launched in March 2024. Tokenization represents fund interests through digital records. By late 2024, it represented approximately 40% of the tokenized Treasury fund market. Its holdings are the short-dated Treasury instruments eligible for GENIUS-compliant reserves.
Circle issues USDC, the second-largest stablecoin by market capitalization. A substantial fraction of its reserves sits in BlackRock’s Circle Reserve Fund, a government money-market fund registered with the Securities and Exchange Commission. The firm that co-authored Going Direct and managed emergency corporate purchases is embedded in the new reserve infrastructure. Its asset-management business also collected fees on ETFs those purchases supported.
This continuity runs through institutions. BlackRock retained and extended its central-bank relationships through successive layers of the architecture. The sequence does not require an additional hidden plan to establish those relationships. Going Direct demonstrated a private firm’s ability to manage central-bank balance-sheet operations at scale. It also demonstrated emergency fiscal-monetary fusion and precise, rapid direction of money creation beyond the traditional bank-lending route.
The GENIUS framework carries that demonstration into permanent, non-emergency statute. Section 4015 had suspended ESF restrictions during a “national emergency”; that condition permits renewed activation. The specific facilities ended; the capacity they established became dormant. Emergency status had supplied legal justification for operating it.
The 2025 statute removes the emergency requirement from the corresponding stablecoin architecture. What crisis licensed in 2020 becomes part of the statutory order in 2025. Those dates mark the passage from emergency implementation to permanent design.
The COVID Working follows the pandemic’s operational machinery. The Monetary Transition Architecture follows the 2025–2026 legislative and executive sequence. Going Direct joins them through a written blueprint, its emergency execution seven months later, and its extension into durable monetary infrastructure.
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.