Fed announces 'unlimited' QE for COVID
On March 23, 2020, the Federal Reserve announced 'unlimited' quantitative easing in response to the COVID-19 market disruption — a commitment to purchase Treasuries and mortgage-backed securities in whatever amounts were needed to support market functioning. The Fed's balance sheet expanded from $4.2 trillion in February 2020 to $8.9 trillion by March 2022 — over $4.7 trillion created in 24 months. Consumer-price inflation, which had been dormant under QE 1-3, rose to 9.1 percent by mid-2022. For the first time since the 1970s, major Western economies experienced sustained consumer-price inflation from monetary expansion. The mechanism had finally produced the CPI response that had been predicted.
The 2020-2022 QE episode differed from 2008-2014 in one critical respect: it was combined with large direct fiscal transfers to households. Stimulus checks, enhanced unemployment benefits, and PPP loans put newly-created dollars directly into consumer hands rather than into bank reserves. The consumer-price response followed the distribution channel, not just the aggregate supply of money.
07 · Stealth Printing
In November 2008, the Federal Reserve launched Quantitative Easing — the purchase of long-dated Treasury and mortgage securities with newly-created reserves. It was, mechanically, money-printing. Politically, it was called 'unconventional monetary policy.' The innovation was not the printing; central banks had been doing that for three centuries. The innovation was that the printing became invisible to most people — the new money entered the financial system through bond purchases rather than fiscal deficits, and its effects showed up in asset prices rather than in consumer goods. Alongside QE, central banks have developed a toolkit of yield-curve control, reverse repo operations, currency swap lines, and measurement adjustments to the inflation indices themselves. The era's thesis: debasement still happens; it's just harder to see.
Read the full era →- Nov 25, 2008Federal Reserve launches QE1
- Sep 21, 2011Operation Twist — maturity manipulation
- Apr 4, 2013Bank of Japan launches QQE
- Jan 29, 2016BOJ introduces Yield Curve Control
- 1996 — 2023CPI hedonic adjustments and substitution
- 2018 — presentTurkish lira collapse — rate cuts into inflation
- Sep 23 — Oct 14, 2022UK gilt market crisis
- 2023 — 2025Central Bank Digital Currency pilots