did you forget about all the money the fed printed during covid?
fed independence is important, but literally irrelevant in the face of rampant money printing
fed independence is important, but literally irrelevant in the face of rampant money printing
The government can print money and inject into the system. Some people have money so they continue to buy stuff but maybe at a slower pace or less amount. Things also can get expensive but it is not a total collapse.
So the mass printing of money meant that banks didn't collapse.
It also meant that a fucktonne of cash went into the hands of the uber rich.
https://www.sciencedirect.com/science/article/abs/pii/S00941...
Once problem we need to solve is how to unwind housing prices without financially ruining honeowners whose house is their primary/only wealth. Of course this problem is even more severe in areas of the country that are becoming uninhabitable due to changes in climate as it drives down demand.
* housing market was already quite bad before covid (see sibling comment)
* Savings rates have hovered around 5% for almost 25+ years - https://fred.stlouisfed.org/series/PSAVERT
this president is trying to money print during non-crisis, to ramp up economy to "20% GDP".
why downvote? Trump literally said he wants a GDP that goes to 20% or 100%. Shoot to the moon.
what would have been the correct actions in that situation?
really the government should tax in good times.
and
spend in bad times.
and be a counter weight to private sector
Instead, the golden geese of the American economy (the actual golden geese), simply stayed home and worked from their laptop.
This created a situation where people were getting their regular paycheck, plus getting a multitude of stimulus on top of that. There were many making $100k+ salary, not paying rent (rent moratorium), not paying student loans (student loan moratorium), and not going out to do anything, resulting in having huge pools of cash laying around. If you had a mortgage, you got to refi at 3% and dramatically cut your mortgage bill. I won't even get into PPP loans either, everyone knows the story there.
I could write pages and pages about this, but the short of it is, we thought we need a wheelbarrow of money, but technology meant we only needed a jug of money. But we still got the full wheelbarrow.
There was a surge and a pull back.
Post-COVID Tightening: After this historic surge, the Federal Reserve began "quantitative tightening" in 2022 to combat inflation, slowing M2 growth to near zero and eventually reversing it.
Or in other words the data seems to show the loosening effects were more powerful than the tightening ones. Now that the RRP has been drawn down balance sheet growth will likely occur.
[1] https://fred.stlouisfed.org/series/RRPONTSYD
[2] https://fred.stlouisfed.org/series/BAMLH0A0HYM2
[3]https://www.chicagofed.org/research/data/nfci/current-data
The M2 money supply went from 15.4b at the start of 2020 to a peak of 21.7b, before slightly reversing to 20.7b. Then they just continued printing. Now it currently stands at a record high of 22.2b. The dollar is more diluted than ever.
Summary of the Policy Reversal Period Policy Action Balance Sheet Impact
June 2022 – Nov 2025 QT (Tightening) Shrank from ~$9T to ~$6.5T
Dec 1, 2025 QT Ends Runoff stops; maturing assets reinvested
Dec 12, 2025 – 2026 Reserve Management Expansion begins via T-bill purchases
By December 1, 2025, the Fed officially halted QT after reducing its balance sheet by approximately $2.4 trillion. The following factors forced the reversal to expansion: 1. Liquidity Squeeze and Repo Market Stress As the Fed drained cash from the system, bank reserves fell toward "critical thresholds". This caused stress in the overnight repo market, where banks lend to each other. Spiking Rates: Key short-term lending rates, such as the Secured Overnight Financing Rate (SOFR), spiked above the Fed’s target range, indicating cash was becoming scarce.