It attached a few strings — for instance, companies that get direct loans backed by Treasury funding could be prevented from paying out dividends or buying back shares. The Fed has led the charge, offering to buy unlimited amounts of U.S. government bonds and mortgage-backed securities -- and lend trillions more to corporations and municipalities through temporary purchases of their obligations -- as global investors seek to unwind years worth of accumulated leverage in their own portfolios. The first of those never materialized and the second is the last thing on the minds of policy makers grappling with one of the Richard Clarida, the Fed’s vice chair, said in a recent Bloomberg TV interview that if anything, the central bank is trying to guard against disinflation as demand plummets, adding that moral hazard concerns “aren’t relevant considerations” because the pandemic “is an entirely exogenous event.”The buying so far has helped stabilize financial markets, shining a spotlight on another longstanding criticism levied against central bankers: their actions ensure swift relief for investors, while working people dependent on labor income have to wait for the help to trickle down.Providing companies with a stable source of funding helps many of them stay afloat, but it doesn’t ensure that those companies retain employees. But it didn’t get very far and even the small, gradual reduction it achieved was met with occasional bouts of market turmoil.This time around, with more and more assets on more and more monetary authorities’ ledgers, the prospect of any rapid sell-down seems distant.“We just have to get used to a new world where central bank balance sheets are so much bigger,” Deutsche Bank’s Slok said. The graph below shows the purchasing power of the US dollar since 1913. Picking winners and losers is not.“Losses look really, really bad,” Kathryn Judge, a professor at Columbia Law School, said in an email. The Fed won’t be involved in that set of loans.The Treasury and the Fed will work together to decide how the $454 billion should be deployed. Its huge bond holdings, 43% of the total, impose limits on liquidity. How Much has the Dollar Devalued Since 1913. Central-bank balance sheets are expanding to record levels amid their latest buying spree, raising questions about how big they can get and whether those assets can ever be sold back to markets.Policy makers didn’t have much luck paring down much smaller portfolios in the decade since the financial crisis. But those taxpayer dollars can be leveraged: Because the Fed expects most borrowers to pay back, it does not need one-for-one support. When the Fed buys bonds using its emergency powers, it takes an asset out of the system in exchange for central bank cash.“When it comes due, cash essentially has to be taken out of the private banking system and given back to the Fed,” said Matthew Luzzetti, chief United States economist at Deutsche Bank.That said, money can be hard to fully snuff out once it is created. The new Fed Policy is INFINITE low rates and INFINITE money printing. The Fed, at $6.4 trillion or roughly 30% of GDP, seems modest by comparison while the ECB figure is around 39%. The Fed could also be trying to spur more inflation, which has been coming in under its preferred target of around 2 percent a year. Here’s how that works.Treasury Secretary Steven Mnuchin has a favorite talking point: With the Federal Reserve’s help, the government will turn a $500 billion spending package The answer lies in the central bank’s emergency lending authorities, given to it by the Federal Reserve Act. The Fed could simply print the money to back that lending, but it avoids taking on credit risk, so it asks for Treasury funding to insure against losses.