Nowadays, the governments do not pump money directly into the market anymore, they apply Quantitative easing (QE). According to investopedia, QE is a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment. It is used desperately by central banks in various countries.

In an paper updated in June, 2020, Seth Carpenter, Selva Demiralp, Jane Ihrig, and Elizabeth Klee exploit Flow of Funds data to assess the types of investors that are selling to the Federal Reserve during four different asset programs: the large-scale asset purchase program (LSAP) that took place from November 2008 to June 2010 (LSAP1); LSAP2, from November 2010 to June 2011; the maturity extension program (MEP), from September 2011 to December 2012; and the reinvestment program for proceeds of maturing and prepaying mortgage-backed securities, from August 2010 to December 2012.

There are four buying activities included in this research. Overall, the results suggest that the Federal Reserve is ultimately interacting with only a handful of investor types. Households (the group that includes hedge funds), broker-dealers, and insurance companies appear to be the largest sellers of Treasury securities when the Federal Reserve buys these securities. Households, investment companies, and to a lesser extent, pension funds, are the largest sellers of MBS when the Federal Reserve buys. So How does Federal Reserve provide life support money to the government? It’s not direct, instead, it goes through these four type of investors.

Since the increase balance sheet is not directly pumped into market -new form called QE, inflation seems not likely to happen. This is proved after 2008.