Submitted by Taps Coogan on the 21st of March 2020 to The Sounding Line.

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According to the Fed’s latest weekly balance sheet data release, their balance sheet has surged to a record high of $4.6 trillion as of Wednesday the 18th of March. That represents a $869 billion increase since the repo markets first blew up in early September.

Over half of the growth in the Fed’s balance sheet ($441 billion) has come from their subsidized repo facility. Another $321 billion represents Treasury bills purchased through their “Not-QE” program. Another roughly $60 billion of treasury notes and bonds have been added via the Fed’s new QE-5 program. The have also reopened their Primary Dealer Credit Facility (PDCF), whereby they offer loans to broker-dealers and banks and accept pretty much anything as collateral, including distressed assets. That PDCF has so far made $28 billion of loans.

In order to put the magnitude of the Fed’s bailout of the financial system in perspective, consider this: The Fed has already directly monetized roughly $381 billion in treasury debt since last September via just their “Not-QE” and QE-5 programs. In other words, the Fed has already ‘printed’ enough money and bought enough government debt to cover all of the $1,200 checks that Congress is planning to send to most working Americans as well as the $500 check for each child. In fact, they have already monetized enough treasury debt to write a $1,172 check to every single American, regardless of their age and income level, at essentially no cost to the Federal government

Keep in mind that when we talk about the Fed monetizing those checks, we aren’t even counting the $441 billion that the Fed has injected into the financial system via their repo facility or the $28 billion in loans from the PDCF.

Welcome to ‘Helicopter Money.’ Let’s hope the Fed has more success in “normalizing” policy after this crisis than they had after the last one. Don’t hold your breadth.

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