The Federal Reserve Balance Sheet Continues to Explode Higher as Unemployment Skyrockets

The Federal Reserve balance continues to grow at a rampant rate as it hit a record of $6.72 trillion as the Fed continued aggressively buying treasuries and mortgage-backed securities.

  • Total assets held by the Fed rose by $65.5b in the week through May 6, according to data published Thursday on its website
  • Borrowing through the Commercial Paper Funding Facility rose to $3.99b from $3.37b
  • Small-business loans backstopped by the Fed’s Paycheck Protection Program Liquidity Facility, launched on April 16, stood at $29.2b, up from $19.5b a week earlier
  • Liquidity swaps with foreign central banks rose to $444.9b, up from $439.0b the previous week, as the Fed continued to ease access to dollar funding worldwide
  • Loans through the Money Market Mutual Fund Liquidity Facility fell to $42.8b from $46.3b the week before
  • Lending through the Primary Dealer Credit Facility fell to $14.9b from $25.5b
  • Borrowing by banks from the Fed’s discount window fell to $26.5b from $31.8b

Meanwhile, unemployment in the United States continues on its parabolic path as the unemployment rate exploded to 14.7% in April. It is important to note that the real jobless rate is at least 20%. 

The reason the unemployment figure is obscured is due to the Bureau of Labor Statistics has said not all workers accurately responded to a question about their employment status. Some people who weren’t working but still considered themselves as having a job didn’t end up being counted as unemployed.

Had these workers answered the government’s monthly survey correctly, the BLS estimates the official unemployment rate would be nearly 20% today.

The highest unemployment figure ever recorded in the United States is 24.9%, which was recorded during the great depression of 1933, which showcases that we are not far from previous record highs.

The question is now, how high will the Federal Reserve balance sheet and how much government debt will become monetized? It seems QE programs on a global basis are not even through its first inning as of yet as more and more economies report stunning fiscal deficit and GDP projections for 2020.

Interesting times ahead.

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