NEVER BEFORE have central banks created so much money in so little time. In the past three months America's monetary base has grown by $1.7trn as the Federal Reserve has hoovered up assets using new money. As The Economist went to press, the European Central Bank (ECB) was expected to expand its emergency bond-buying programme beyond its initial size of €75obn ($83obn). Money-creation has tacitly financed much of the emergency spending unleashed to help economies through the pandemic. It has also propped up asset markets. The Fed is buying junk bonds; the Bank of Japan has stepped up its purchases of equities and could soon own over a fifth of many large Japanese companies (see Free exchange). All the while economies are contracting. As a result, America's base-money-to-GDP ratio may grow by nine percentage points in the second quarter of 2020. That would be by far the biggest such rise in decades.
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