USA Today - The U.S. is 'printing' money to help save the economy during COVID-19 crisis: How far can it go?
Article by Brent Schrotenboer in USA Today
In its frantic scramble to save the American economy, the central bank of the United States seems to have the ultimate superpower.
It works like magic. With a few strokes on a computer, the Federal Reserve can create dollars out of nothing, virtually "printing" money and injecting it into the commercial banking system, much like an electronic deposit. By the end of the year, the Fed is projected to have purchased $3.5 trillion in government securities with these newly created dollars, one of many tools it is using to help prop up the ailing economy during the COVID-19 pandemic, according to Oxford Economics.
But an unstated, practical result of the Fed's bond purchases is that it creates money to finance the gigantic debt run up by Congress. The very idea of it tends to explode the heads of those who say dollars should come from work, savings and investment instead of thin air. In the age of a nearly $25 trillion national debt, such “sound money” concepts seem outdated – relics of a bygone era in which the value of a dollar once was based on a fixed amount of gold.
“What we’re working with now is fake money, a fake measuring rod,” longtime Federal Reserve critic and former Republican presidential candidate Ron Paul told USA TODAY. “It is unbelievable.”
In this case, the federal government isn’t just creating massive amounts of dollars from scratch. The government also is, in effect, using those newly created dollars to pay down its own debt, this time at an unprecedented scale because of the economy's massive shutdown triggered by the pandemic.
This might sound like a financial fantasy: You mean we can pay our credit card bills by simply pressing a button?
To read this fascenating article in USA Today in its entirety, click here.