The Fed currently has the legal authority to buy U.S. Treasury debt, mortgage-backed securities and investment-grade corporate debt. “Congressional approval would be needed before stocks could be purchased,” added Martin.
While the notion of the Fed buying equity ETFs may seem like unlikely, nothing during a financial crisis or severe economic climate is necessarily out of the question.
In that vein, Federal Reserve Bank of Boston President Eric Rosengren recently said, “We should allow the central bank to purchase a broader range of securities or assets.”
Ron DeLegge is founder and chief portfolio strategist at ETFguide, and is the author of “Habits Of The Investing Greats.”