Policymakers around the world have committed unprecedented amounts of fresh money in a bid to stave off an impending recession, or worse: a total depression. In the United States, the Senate approved a $2 trillion stimulus package in late March, and the House of Representatives has now accepted a proposal from House Democrats for another $3 trillion meant to ease the needs of Americans who are facing an unemployment rate of nearly 15%. As a response to COVID-19, the Federal Reserve has undertaken a wave of quantitative easing unparalleled in its history.
As the monetary body responsible for managing the world’s reserve currency, the Fed uses quantitative easing as a means of infusing the economy with fresh liquidity. Having total control over money printing allows the Fed to print as many dollars as it wants, which it then injects into the financial system by purchasing assets on the open market.
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