The U.S. has printed unusual sums of money, both figuratively and literally, in response to the pandemic.
The “M2” money supply, which includes bank deposits as well as cash, grew 25% during 2020, as the Federal Reserve bought bonds and made loans to counter a plunge in economic activity. According to records dating back to 1980, this year is the first time the measure ($19.2 trillion as of Dec. 7) has grown more than 15% in a single year.
The Fed also met unprecedented demand for paper currency. Currency in circulation totaled $1.76 trillion as of Dec. 31, 2019. In fiscal 2020 (ending Sept. 30) the Fed printed 5.8 billion new banknotes, 600 million more than expected, to meet “unprecedented” demand for cash at home and abroad. For fiscal 2021, it has outlined plans to print up to 9.6 billion bills of various denominations, or $430 billion, a potential increase of 66% over fiscal 2020.