To set the stage, consider the size of the Fed’s balance sheet over the past several years. Assets have risen from about $ billion in 2006 to about $ trillion today, or – as seen in figure 1 – from 6 percent of nominal gross domestic product (GDP) to about 26 percent of nominal GDP.
So, as a country, we should also be looking at other options to reduce unemployment. One option is for fiscal support, including through spending on infrastructure. This spending not only adds to demand in the economy, but it also adds to the economy’s productive capacity. So it works on both the demand and supply side.