Don't Worry, The Fed Has Belts And Suspenders

The Fed's balance sheet is approaching $7 trillion dollars. This is what Bernanke meant by suspenders.

On February 27, 2013, Ben Bernanke spoke to US Congress about how the Fed would unwind its balance sheet.

Bernanke said, We Have “Belts, Suspenders” to Unwind Balance Sheet .

Bernanke’s vague answer to Sen. Richard Shelby, R-AL, when asked how the Fed will deleverage the balance sheet, was this: “In terms of exiting from our balance sheet… a couple of years ago we put out a plan; we have a set of tools. I think we have belts, suspenders – two pairs of suspenders. I think we have the technical means to unwind at the appropriate time; of course picking the exact moment to do, of course, is always difficult.

Belts and Suspenders Detail

Belts and Suspenders Detail

Belts and Suspenders Synopsis

  • Belt tightening took the Fed's balance sheet from $4.46 trillion to $3.77 trillion. 
  • Suspenders took the Fed's balance sheet from $3.77 trillion to $6.90 Trillion in just 9 months.

Tapering, That's All You Get

Debate Over Balance Sheet Reduction 2109-09-18

Please recall the September 18, 2019 QE Debate: What Did Powell Mean by "Need to Resume Balance Sheet Growth"?

Powell's Prophecy

"And we are going to be  assessing the question when it will be appropriate to resume the organic growth of our balance sheet."

More prophetic words have seldom been heard.

Some objected to my post because of the word "organic". I commented.

The Fed may do a brief period of "organic" expansion (which by the way can mean anything the Fed wants), but I propose more QE is coming whether the Fed "intends" to do so or not.

Fed's 2019 Interest Rate Expectations vs Market's Expectations

Here's a look at the Fed's 2019 Interest Rate Expectations vs Market's Expectations

I propose the Fed is wrong, again, as usual.

For discussion of today's FOMC decision, please see Fed Cuts Rates 1/4 Percent, Three Dissents: Dot Plot Suggests No More 2019 Cuts

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