These are getting to be serious amounts.
The QE Unwind is ramping up toward cruising speed. The Fed’s balance sheet for the week ending May 2, released this afternoon, shows a total drop of $104 billion since the beginning of the QE Unwind in October – to the lowest level since June 11, 2014.
During the years and iterations of QE, the Fed acquired $3.4 trillion in Treasury securities and mortgage-backed securities. The mortgages underlying those MBS are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The “balance sheet normalization,” as the Fed calls it, was nudged into motion last October. But the pace accelerates every quarter until it reaches up to $50 billion a month in Q4 this year.
This would trim the balance sheet by up to $420 billion this year, and by up to $600 billion in 2019 and every year going forward, until the Fed considers the balance sheet to be adequately “normalized” — or until something big breaks, whichever comes first.
H/t reader squodgy:
“Nobody really appreciates the long term implications of flooding the western economies with unsubstantiated and thus worthless paper money.
The inflationary bubble it is creating is matched only by the property and car loan bubbles, all three of which are being smokescreened by Media disinfo about the state of the economies.
To increase QE yet again, which the Fed, ECB & BofE are all doing to camouflage the dragging out of the planned collapse to hide the cause, is making the size of that eventual collapse ever bigger.
We are certainly living in interesting times!
Exactly as we predicted.”
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