The Balance sheet of the Federal Reserve System, the Fed, is now over $7 trillion and this is helping the stock market with the Nasdaq $NSDQ100 at all time high and the S&P 500 $SPX500 positive YTD even in the middle of a big recession. But the Fed printing money is bad for stocks over the long-term.
The Fed was only founded in 1913 with a dual mandate, keep inflation low and unemployment rate low by controlling the interest rate. Unfortunately, monetary policies (controlling interest rate) was not enough in 2008 and the Fed had to resort to Fiscal Policies by printing money in a process known as Quantitative Easing (QE). Quantitative easing never stopped and now the markets are dependent on the Fed.
This puts great pressure on the banks $JPM and the banking system while stock and bond prices keep going higher. But it also creates a wealth gap and can lead to bad political consequences. Printing money can also lead to lower innovations and inflation.
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