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From where did the Federal Reserve get the trillions of dollars that it used to prop up the economy since 2008 through buying debt, stocks, and toxic assets from governments and corporations?

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Since 2008, the Federal Reserve has engaged in a policy called quantitative easing [QE] to provide "relief" from the Great Recession (of 2007 to 2009) and Covid-19. QE involved buying more than $7 trillion in debt, stocks, and toxic assets from governments and corporations. In the words of Ph.D. economist Benn Steil, the Fed implements QE mainly "with newly conjured dollars" that it creates electronically. During and after the Great Recession, the Fed created about $3.5 trillion in new money, and many economists were concerned this would stoke inflation, but inflation (as measured by the Consumer Price Index) remained lower than in the prior 4 decades. However, the prices of assets like stocks and real estate increased rapidly, a phenomenon known as asset inflation. This increases the wealth of those who already own assets, while making them unaffordable for others. Over the past year, inflation has set in, and annual CPI growth is now 7.9%, higher than any time in the past 40 years.

DocumentationQE OverviewQE Winners & LosersRecent Inflation

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