The United States government has been unleashing an unprecedented flood of money to stabilize the economy and act as stimulus. Interest rates are already now back at zero-percent, and the Federal Reserve is back in the quantitative easing to fight the COVID-19 recession.
There have been ongoing questions and discussions about where all the economic stimulus and rescue money goes and how the government really buys assets to keep liquidity going. That was true in the Great Recession and it’s true again in the COVID-19 pandemic recession.
The Federal Reserve has released its latest report on balance sheet trends showing a $205 billion rise in the last week ending on Wednesday, April 22. The new balance sheet has risen to a whopping record-high of $6.534 trillion.
Holdings of securities rose to $5.534 trillion during this weekly period, up from $5.359 trillion on Wednesday, April 15. The balance sheet trends showed that holdings of U.S. Treasury securities (bills, notes and bonds) was about $3.91 trillion and that is $1.71 trillion higher than a year ago. The level of $1.622 trillion in mortgage-backed securities was more or less in-line with the same level a year earlier.
Going back to the Fed’s balance sheet report for the week of January 15, 2020 shows where things were right before the coronavirus news from China was gathering steam. The total securities held outright by the Fed at that date was $3.769 trillion. That puts the gain in securities holdings alone at $1.765 trillion in less than 100 days.
There has been more stability in the banking efforts compared to when the markets were in disarray in march. Discount window borrowings was more or less in-line with the prior week at $33.7 billion. The Fed’s currency swaps with foreign central banks rose to $409.7 billion from $378.3 billion the prior week.
News of the Federal Reserve’s balance sheet may not be market moving, but it does display exactly how the economic stimulus is being accounted for.
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