Fed balance sheet and US government debt : Values rising so fast

USA Flagge

In the wake of the Corona crisis, central banks around the world are printing money without end to prevent interbank markets from drying up. This will ensure that lending to companies and consumers can be secured. The central banks are also buying up a lot of debt, as in the USA! Governments are of course also heavily indebted in order to get companies and citizens through the crisis. The US government, for example, sends cheques to millions of US citizens to provide them with money. So they can buy food at all, because they are currently (for good reasons) prevented from working.

How does this look in numbers? Here we see a chart of the St. Louis Fed. This is one of the regional central banks in the US Federal Reserve System. The Federal Reserve’s balance sheet is shown here since 2006, when it was still at $850 billion. In the course of the financial crisis in 2008, it already jumped from 925 billion to 2.2 trillion US Dollars. By 2014 it had climbed to over 4 trillion US Dollars. Since then it has remained stable because the Fed no longer had to intervene in the wake of the booming US economy. And what are we currently seeing? As of March 11, 2020, the Fed’s balance sheet exploded in leaps and bounds in the wake of the corona measures, namely from USD 4.3 trillion to the current USD 6.5 trillion. A gigantic, a dramatic increase!

Bilanzsumme der Fed

Rising US government debt

Even without the corona crisis, US government debt continues to rise. Now this increase is only dramatically accelerated by the corona crisis. The chart shows the course of the debt from 2006 to the end of 2019. An increase from USD 7.9 to 23.2 trillion! From the end of 2019 to March 11, US government debt rose “only” to USD 23.4 trillion. But then things really took off! At times even in steps of 100 billion per day. By last Thursday (latest update), the figure had risen to 24.7 trillion Dollars, according to the official figure of the US Treasury Department. And this is how it will continue.

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