America's monetary punchbowl is as full as ever
Despite a rare public spat between the US Treasury and the Federal Reserve, stimulus cash will keep coming.

There has been a rare public spat between the US Treasury and the Federal Reserve, America's central bank. At the end of last week outgoing treasury secretary, Steven Mnuchin, ended a raft of Fed-run emergency lending programmes established in response to Covid-19.
The programmes, which include support for corporate bond markets as well as a provision to lend to smaller businesses, have not been widely used but played a major role in restoring confidence to global credit markets after their meltdown this spring. Mnuchin says that the policies have “clearly achieved their objectives” – bond markets are far calmer now – and should end on 31 December. Although it complied with Mnuchin’s request, the Fed said it would “prefer the full suite of emergency facilities… to serve their important role as a backstop for our still-strained and vulnerable economy”. The imminent arrival of new management at the US Treasury meant markets reacted calmly to the spat. This week Joe Biden picked former Fed chair Janet Yellen to be his new treasury secretary. With Jerome Powell continuing at the Fed, that makes for an “exceptionally dovish combination”, says Stephen Innes of Axi. Powell and Yellen have similar views so next year is likely to bring harmony on the policy front.
The end of the support programmes is unlikely to have much effect on the real economy, Andrew Hunter of Capital Economics tells Liz McCormick on Bloomberg. Yet deprived of these tools, the Fed will now be more inclined to boost its quantitative easing (QE, or money printing) programme in order to stimulate the economy. Not that it needs more stimulus: corporations can already load up on mountains of cheap debt courtesy of central banks; junk bond yields have fallen to a mere 4.6%. The monetary punchbowl is as full as ever.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
How taking a two-year career break could leave a £26k hole in your pension
Career breaks are increasingly common but it is important to take steps to protect your pension, as gaps compound over time
-
Cash in on your attic: Thousands could be sitting dormant in your storage
Selling your valuables at auction could be far more lucrative than you think. We take a look at how auctions work, and some tips to help you maximise your profits
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'
Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industry
Opinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffs
The majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump’s tariffs: what is he thinking and how should the UK respond?
Every right-thinking person knows that free trade is a surer route to the wealth of nations than protectionism. So, what is Trump thinking?
-
Trump wants to colonise Mars – will it happen?
Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
Why stagflation now seems like America's "optimistic scenario"
Investors have gone into tariff shock, and stagflation could now be the optimistic scenario for the US economy.
-
Why are energy bills so expensive in the UK?
Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
-
Will Putin invade Europe? Why investors know Russia is a paper tiger
Opinion Markets are right to ignore talk of Putin invading Europe, says Max King.