February 15, 2022

When extreme measures to combat the spread of the corona virus were put into place in mid-March 2020 and the economy fell off a cliff, the Federal government implemented a $3.0 trillion fiscal stimulus package to help stem the slide.  At the same time the Fed increased the size of its portfolio by  $3.0 trillion to $7.0 trillion.  Thus, the true amount of stimulus was $6.0 trillion — $3.0 trillion from the government and $3.0 trillion from the Fed.  Of the $3.0 trillion increase in the Fed’s portfolio it purchased roughly $1.6 trillion of U.S. government securities, $0.5 trillion of mortgages, and the remaining $0.9 trillion was in in a variety of other types of credit including repurchase agreements, loans to money market mutual funds for liquidity, loans to small businesses (paycheck protection program), loans to medium-sized businesses, and loans to state and local governments.

The Fed had been purchasing about $80 billion of Treasury securities and $40 billion of mortgage-backed securities every month.  But that has been scaled back and is now $20 billion of Treasury securities and $10 billion of mortgages.  It plans to phase out its purchases of securities by the end of March.  Currently,  the composition of the Fed’s portfolio looks like this:

Its holdings of U.S. Treasury securities are 64% of the total, mortgages 30%, and other assets including U.S. agency securities and the  paycheck protection program are the remaining 6%.

Stephen Slifer


Charleston, SC