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Expand chart
Data: Yardeni Research. Chart: Danielle Alberti/Axios

The Fed has not been alone in its unprecedented intervention in the U.S. economy during the pandemic. Central banks around the world have been printing money out of thin air and using it to purchase assets in order to stimulate their respective economies.

The big picture: Just the world's four largest central banks had accumulated $28.8 trillion of assets as of February, according to data collected by Yardeni Research.

What's next: "For central banks, I don’t think there is any alternative to what they’ve been doing until now, namely vastly significantly support the economy," former European Central Bank president Mario Draghi told Axios in December.

  • "Support, in my view, will continue for quite a long time."

Go deeper

The money spigot

Expand chart
Data: Yardeni; Chart: Danielle Alberti/Axios

"For central banks, I don’t think there is any alternative to what they’ve been doing until now, namely vastly significantly support the economy," former European Central Bank president Mario Draghi told Axios in December. "Support, in my view, will continue for quite a long time."

The Fed takes on climate and race

Photo illustration: Aïda Amer. Photos: Robert Gauthier (Los Angeles Times), Stephen Maturen/Getty Images

Historically untouchable issues — like climate change and race — are now on the table for the Federal Reserve, as it wades further into uncharted territory.

Why it matters: The about-face has implications for how one of the world’s most influential economic bodies steers policy and regulates the nation's banks.

Felix Salmon, author of Capital
Apr 3, 2021 - Economy & Business

Everything old is new again

Expand chart
Chart: Danielle Alberti/Axios

Not all instances of easy money cause asset-price bubbles — but all asset price bubbles for the past 250 years have been associated with loose monetary policy.

Flashback: The first bubble to be inflated at least in part by expansive monetary policy was probably the Mississippi bubble of 1719.

  • France's Banque Royal issued abundant currency to finance the purchase of shares in Compagnie des Indes, the company controlling trade in Louisiana and elsewhere.
  • Share prices spiked sharply, as did inflation, until John Law, who controlled the company, stopped printing money and managed to deflate the share price.

Central banks have fueled dozens of subsequent bubbles.

  • In fact, it's almost impossible to find a bubble since 1770 that isn't associated with lax monetary policy.
  • The current run-up in both stock prices and real estate has many observers diagnosing a bubble. If that's the case, it's entirely in line with previous episodes where interest rates were kept extremely low for an extended period.

The big picture: Not all bubbles end in crises, although many do — at which point the very central banks that fueled the bubble are generally tasked with cleaning up the mess.

  • What they said: "The central bank cannot effectively directly target stock or other asset prices," said Fed Chair Alan Greenspan in 1999. "It is the job of economic policymakers to mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion."