The government has added to its debt more in weeks than it used to in years at an accelerating rate amid a collapse in GDP.
About $1 trillion has been added a month since March with it set to surpass $27 trillion by the end of June.
Government debt was already increasing at a worrying pace before recently, with the government paying as much as half a trillion in debt interest in 2018.
Interest rates have significantly fallen now, with it difficult for the fed to increase them without it acting effectively as a heavy tax on the government, and thus US taxpayers.
On the other hand at these rates lending operations for banks are unprofitable, which can mean money doesn’t move around at a level it should, thus potentially leading to low or no growth even after the current crisis abates.
“The end of capitalism as we know it,” Holger Zschaepitz of the German financial paper Welt says before adding:
“G3 Central Banks (Fed, BoJ, ECB) have pumped more than $5tn into the markets since March. They bought all kinds of assets, a kind of nationalization through the back door?”
They’re not buying bitcoin as far as we are aware but fed has now moved to buy even corporate bonds, with it unclear who would take over the corporation if they can’t pay back those bonds.
Everyone is printing however so the relative value of fiat money is not changing by much between countries but there are suggestions food prices in US have risen by more than 10%.
Oil prices fell, with people also not spending much, but that’s generally for unnecessary items, unlike food.
In addition all this money is going more to the government and corporations, rather than to people directly save for that $1,000 check Trump gave to every American.
So there might not necessarily be a flooding of the market with new money, and thus there might not be much inflation with total inflation in US and Europe kind of at near zero.
That doesn’t count assets however, which is where much of this new money might go, stocks and maybe even bitcoin or ethereum.