Federal Reserve Funds 165% of Record Pandemic Deficit Spending through Monetary Creation

The comments below are an edited and abridged synopsis of an article by Daniel R. Amerman

Two extraordinary and unprecedented actions are being taken in the attempt to contain the economic damage from the national shutdown in the US, and thereby attempt to prevent a depression. Each are on a scale we have never seen before, and each are almost certain to be long lasting.

Federal Reserve Funds 165% of Record Pandemic Deficit Spending through Monetary Creation | BullionBuzz
COVID-19 pull money from wallet and global economic crisis concept.

Even if the actions are successful—a depression is prevented and a severe recession is shortened—these radical actions occurring over a matter of months and years are not only likely to dominate our investments, savings and retirements throughout the rest of the 2020s, but they are likely to still be changing our lives decades from now, long after the COVID-19 pandemic has been forgotten by most.

Between the economic damage to the nation, the lost earnings and careers, and the costs of the containment of that damage, the shutdowns being used to flatten the curve are likely to be the most expensive event in US history. How the expenses of attempted containment are funded will change everything, and the effects will stay with us for life.

An explosive increase in the national debt is being used to fund an array of emergency programs that are throwing hundreds of billions of dollars at corporations, smaller businesses and individuals. At the same time, all of that money—and quite a bit more—is coming from the Federal Reserve, almost entirely through a process of reserves-based monetary creation.

Up for discussion: an unprecedented increase in the US national debt, and we are still in the early stages.

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