The US government is increasingly relying on the Federal Reserve to prop up the Treasury market and absorb the trillions of dollars in bonds it’s issuing in order to fund its massive budget deficits. The Fed now holds a record 16.5% of US debt. And it’s going to have to buy trillions of dollars of additional Treasuries in 2021 to keep pace with government borrowing.
In other words, there is no end in sight to quantitative easing. In fact, the central bank will have to double its scheduled monthly QE in 2021 to catch up to where it was in 2020.
