In 2009, the US Federal Reserve (Fed) in effect saved the world by embarking on a massive program of monetary stimulus, called quantitative easing (QE), and so – through its extended money-printing and -buying program – prevented a global depression from taking hold.
With the onset of the coronavirus pandemic in 2020, the Fed has embarked on precisely the same path, initiating an initial $700bn bond buyback, this time in conjunction with fiscal measures from the US Congress. More has been promised.
In total, about $3tr has been pumped into the US economy at a time when the GDP could fall 30%, in the same way, it did during the Great Depression of the 1930s, and as its unemployment has already ballooned to nearly 15% from below 4% at the beginning of the year.
As a result, total US debt is set to balloon further. To mitigate the debt surge, the Fed is banking on a huge turnaround in economic growth. Fed chairman Jerome Powell predicts a strong recovery in the US economy already in the third quarter of this year.
Bu hikaye Finweek English dergisinin 4 June 2020 sayısından alınmıştır.
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Bu hikaye Finweek English dergisinin 4 June 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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