The world is coming through a global pandemic.  The Federal Reserve Chairman, Jerome Powell reacted swiftly to the shutdown in the US, adding many liquidity measures that were used during the recovery from the great Financial Crisis as well as new facilities.  The Government also added stimulus to sectors of the economy at an unprecedented level.  This has expanded of the Federal Reserve's balance sheet from about $4 trillion to over $9 trillion.  It was slightly over $1 trillion in 2008 before the Great Financial Crisis.  Through this process combined with the subsequent phases of COVID lockdowns supply in the global economy has been overwhelmed by demand leading to extreme inflation.

 

From what we have discussed in class around domestic and international monetary policy this increase in the balance sheet could lead to problems for the US in the world and in the US.  

What considerations should be debated around these issue?

How might this impact the World economic order?  

How do the tenets of Modern Monetary Theory impact the debate? 

Answer rating: 100% (QA)

The expansion of the Federal Reserves balance sheet combined with the governments stimulus measures can have several considerations and potential impa... View the full answer