The Fed’s balance sheet has already ballooned in size to $5.7trn, from just less than $4trn before the coronavirus pandemic struck, and that’s before the introduction of its new lending facilities and purchases of corporate and municipal bonds. Using $450bn from the Treasury to indemnify it against losses on those loans and bond purchases, the Fed’s balance sheet could swell to $10trn, or close to 50% of GDP.
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