Take a look at that chart a few times and I wonder why the USA has yet to go into an inflation period? To print 20% of the dollar in total amount since its existence in less than a year is a lot of money.
The chart does have drops like the high inflation period in the 80s but considering how far up it is at today it is clear that something is broken. The FED who controls this supply will likely lean this increase in money due to Covid, but there are stories out there that says otherwise.
Zero Hedge had a good one to look at.
The Hedge Fund Bailout Worked: Citadel, Millennium And Point72 Recover Most Of Their March Losses
A quick summary of the Zero Hedge article:
The US Repo market is a short term lending platform of money for anyone who seeks liquidity. Large hedge funds used this platform to gain access to liquidity while paying low interest. The risks were overlooked or ignored as these hedge funds used the liquidity to purchase assets such as equities and bonds. While Coronavirus became an economic issue that trickled into a stock market issue a lot of these hedge funds began drowning on a lot of unrealized losses.
The FED stepped in by delivering more liquidity into Repo market thereby allowing many of these hedge funds desperately needed liquidity to maintain their positions without margin calls. (For those unaware of margin calls it is when traders use borrowed credit to purchase equities and the prices of the equities drop below a certain threshold that requires the trader to add liquidity into their accounts. Without the required liquidity the trader will receive a margin call and their assets are forced to sell to cover the borrowed credit use to buy equities.) FED's intervention in March allowed the hedge funds to withstand the deep drop in equities prices and through the months up until today equities have overall been recovering from those lows allowing the hedge funds to remain liquid.
The FED intervention included a large increase in money supply but the goal of doing so was to prop up the financial system that included saving these hedge funds. If these hedge funds got margin calls and were force to liquidate they would have had to sell assets at low prices of March. This would have led to further equities volatility and likely asset depreciation. The FED literally came in to stick save the hedge funds because losing the equity market entail total US economic collapse. Asset prices rely on markets to asses values and propping their values and in turn continue inflation. The whole scheme is similar to the 2008 Great Recession.
The country and the world has yet to come out of this current recession or depression even though equities are near all time highs. That is because the people who are apart of the system, middle class and lower class population, were not back stop like how the FED back stopped the hedge funds and financial corporations. When people lost their jobs and force to shutdown their stores it became a challenging period. The PPP loans and FED's jaw boning of helping everyday Americans were no where nearly as much as what they had done for the financials. In a misdirection the FED pointed to the government for providing additional fiscal stimulus to help the American people. On the other hand the FED took action without asking for help to back stop the financials.
The point of this post was to look at why the FED did what they did, increasing the money supply at an unprecedented rate. This is helping to elevate markets while depreciating the dollar relative to other currencies. The FED is engage in the stock market from day 1, can not over look their policies and actions, because they could potentially give clues as to what will happen to stock prices.