For bitcoin speculators, last year was a bonanza. The cryptocurrency started January 2020 at $7,194 and on Sunday surged above $34,000 — a more than 360 per cent annual return.
Courtesy of the US Federal Reserve, asset buyers in general have had a stellar pandemic. Whether it was US Treasuries or junk bonds, equity portfolios or high-end property, the free money gusher has lifted all asset prices. Nor is the Fed inclined to stop the party. This year could offer a similar kind of boom to last.
Even if they do not trigger high inflation, the Fed’s extraordinary interventions will come with steep price tags. No doubt these would be far lower than the Fed not having acted at all — particularly in the short term. Had it foregone the more than $3tn expansion to its balance sheet since last March, the US economy would have gone into freefall. Corporate bankruptcies would have piled up and there could have been a 2008-style financial meltdown.