How the Federal Reserve Boosts Asset Values During the Pandemic

This 28 minute video is a must watch for those who have wondered how it could be that with millions of people out of work and hundreds of thousands of small businesses being destroyed due to pandemic lock downs that the U.S. stock market could be at all time highs. My friend John Titus offers an excellent description of how the Federal Reserve created $2.7 trillion in new quantitative easing (electronic money printing) to purchase federal government debt while at the same time directing private banks to increase money supply by $2.7 trillion, which in turn is used to purchase equities. It is all so reassuring to see the stock market flying high (with the primary beneficiaries being the most wealthy), but how long can it last…is this activity in any way sustainable?

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

Leave a Reply

%d bloggers like this: