The U.S. Fed Chairman, Jerome Powell announces that it is preparing to buy unlimited amounts of U.S. bonds and mortgage-backed securities to prevent the economy from falling into depression. Hence, paving way for another $2 trillion worth economic stimuli.
However, the stock market shows little strength after the announcement. The S&P 500 Index closed 2.9% lower at $2237; it records a new low since December 2016 at $2191.
With the employment rates heading towards 30% mark and the world experiencing a lock-down due to the Coronavirus, the stimulus is backed by bleak prospects of revenue. Moreover, while the stimulus might seem necessary at the moment, it is also increasing hyper-inflationary risks.
The current move by the US Feds is an illustration of the Modern Monetary Theory (MMT) which allows the countries like U.S., U.K., and Japan to print indefinite amounts of money without worrying about debt and inflation.