Last night on 60 Minutes, Federal Reserve Chair Jerome Powell was asked whether it’s fair to characterize the central bank’s coronavirus responses as having “simply flooded the system with money.” Powell replied: “Yes. We did. That’s another way to think about it. We did.”
Then the money printer really did go brrr:
Pelley: Where does it come from? Do you just print it?
Powell: We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.
Pelley: In terms of size, Mr. Chairman, how does what the Fed is doing right now compare to the unprecedented action it took in 2008?
Powell: So the things we’re doing now are substantially larger. The asset purchases that we’re doing are a multiple of the programs that were done during the last crisis.
Are we all Modern Monetary Theorists now? So ponder Nick Gillespie, Katherine Mangu-Ward, Peter Suderman, and Matt Welch on today’s Reason Roundtable podcast. The gang also discusses Democratic coronavirus proposals, what the Libertarian Party presidential race looks like now that Rep. Justin Amash (L–Mich.) has dropped out, and whether you should quaff a CBD drink called “Sweet Reason.”
Audio production by Ian Keyser and Regan Taylor.
‘Nadie Es Illegal’ by Ashley Shadow.
Relevant links from the show:
“America’s Long-Term Debt Crisis Is Now a Short-Term Problem,” by Peter Suderman
“Plans for Extended Unemployment Benefits, Wage Subsidies Risk Creating a Zombie Economy,” by Christian Britschgi
“Modern Monetary Theory Is Supply Side Economics—but for the Left,” by Peter Suderman
“Whatever Happened to Inflation?” by Brian Doherty, Peter Schiff, David Henderson, Scott Sumner, and Roberty Murphy
“Turning Japanese,” by Anthony Randazzo, Michael Flynn, and Adam Summers
“Justin Amash Drops Out of Presidential Race,” by Matt Welch
“Vermin Supreme Says This Time, He’s Serious,” by Matt Welch