Delphi Daily

Global policymakers have rapidly become the world’s most popular punching bags as multi-trillion dollar relief packages and pledges of “unlimited QE” inspired viral memes like “money printer go brrr” or parody games like The Fed app. Don’t get me wrong, the policy responses to COVID-19 have been exceptional in every sense of the word, but let’s imagine another extreme scenario, one in which central bankers and lawmakers kick their feet up and do nothing.


Market pundits and crypto enthusiasts alike have detested the Fed’s policies aimed at “bailing out” the world’s largest corporations and overly leveraged hedge funds as the average American faces potentially one of the worst economic crises of our lifetime. Powell & Co. have stolen the limelight as far as monetary policy is concerned, so what are their motivations for acting so aggressively and what are the consequences of their decisions? The answer is murky but a helpful exercise is to imagine where we’d be right now without any government intervention at all.


For starters, it’s highly unlikely the stock market would’ve rallied nearly 25% from its late March bottom. Likewise, credit spreads probably would’ve widened even further and tighter funding markets (which companies big and small rely on to fund day-to-day operations) would’ve threatened to freeze credit markets entirely (as we saw during the 2008 financial crisis).<

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