The Covid-19 Federal Reserve

Abstract

At almost the onset of the effects of the pandemic, the Federal Reserve engaged in a massive asset expansion that was truly unprecedented. In just the first three months of the pandemic, March, April and May of 2020, the Federal Reserve bought $2.13 trillion in securities. Two years later, the money injection reached $4.76 trillion, almost 20% of 2022 GDP! What is more astounding is that unlike the Great Recession interventions, there were no undergoing financial crises that triggered this massive expansion. It has resulted in the end of the Federal Reserve’s annual transfers to the U. S. Treasury that in 2022 equaled 30.5% of the net interest cost of the federal debt. Here, Thomas Saving examines the Federal Reserve’s actions during both the Great Recession and the Covid-19 pandemic, as well as the problems facing the Federal Reserve – a catastrophe of its own making.