Home NEWS-BUSINESS How the Fed’s Magic Money Machine Will Turn $454 Billion Into $4 Trillion

How the Fed’s Magic Money Machine Will Turn $454 Billion Into $4 Trillion

by staff
How the Fed’s Magic Money Machine Will Turn $454 Billion Into $4 Trillion


Treasury Secretary Steven Mnuchin has a favorite talking point: With the Federal Reserve’s help, the government will turn a $500 billion spending package working its way through Congress into a $4 trillion booster shot for the United States economy.

How, you might ask, does that figure?

The answer lies in the central bank’s emergency lending authorities, given to it by the Federal Reserve Act. When the Fed declares that circumstances are unusual and exigent, and Treasury signs off, it can set up special programs that essentially buy debt from — or extend loans to — businesses large and small.

The Fed could simply print the money to back that lending, but it avoids taking on credit…



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