Clearly there was a whole lot of speak in regards to the Federal Funds Price selections and Quantitative Tightening/Easing, but it surely’s been troubling why extra folks aren’t speaking in regards to the Fed steadiness sheet.
Again in 2008 when Bernake/Paulsen agreed on phrases and congress handed the Emergency Financial Stabilization Act it was agreed that the Fed would purchase $700b in mortgage again securities from the banks which led to the Act being nicknamed the “financial institution bailout of 2008.”
Additionally on the time it was stated (by everybody) that ultimately these emergency insurance policies would should be rolled again. FOMC member Charles Evans stated “as soon as the financial system recovers and monetary situations stabilize, the Fed will scale back the dimensions of the steadiness sheet.”
Since then, not solely was the steadiness sheet not diminished, the bailout has ballooned from $700 billion to $9 trillion (43% of GDP). And in 2016 Bernake himself wrote a paper utterly altering the unique opinion and saying that they’d simply develop the steadiness sheet infinitely:https://www.brookings.edu/weblog/ben-bernanke/2016/09/02/should-the-fed-keep-its-balance-sheet-large/
Clearly folks can see the problem right here, what was as soon as thought of a $700 billion financial institution bailout has quietly change into a $9,000,000,000,000 bailout and the S&P 500 has been straight 1:1 correlated with the expansion of this “steadiness sheet” quantity:https://www.currentmarketvaluation.com/posts/2021/07/Fed-Stability-Sheet-vs-SP500.php
Additionally on the top of Covid in March 2020 the Fed determined to desert factional reserve banking utterly, setting the reserve necessities to 0:https://www.federalreserve.gov/monetarypolicy/reservereq.htm
So now that we’re seeing persistent and excessive inflation is not this positively a case of taxation with out illustration? The banks have given themselves $9,000,000,000,000 which required no congressional motion and now persons are paying for it within the type of increased costs on items, providers, housing, transportation, and vitality and many others.
Why aren’t extra folks speaking about this, when TARP handed in 2008 it was headline information.