As deaths mounted, the coronavirus (COVID-19) pandemic took nearly everyone by surprise and in early 2020 the U.S. federal government under then President Donald Trump acted quickly to flood the American economy with a bazooka of liquidity, while growing the balance sheet of the Federal Reserve. At the onset of the pandemic lockdowns, U.S. companies started to hoard cash and reduce expenditures. In March 2020, the Fed dropped interest rates to near zero and started a bunch of bond buying programs. These QE measures enabled corporations to raise capital at a very low cost. In fact, the U.S. Department of Treasury tapped its Exchange Stabilization Fund to capitalize a number of credit facilities. Debt was easy to take from bond investors, while bank debt wasn’t as attractive.
Facing panic as COVID gene therapy vaccines were being tested at this time under Operation Warp Speed, U.S. corporations started to hoard cash by raising debt from investors, cutting costs, and restructuring operations. In the aggregate, with more money printing and corporate discipline, U.S. companies started to increase their bank deposits without taking more bank loans in the aggregate.