Waiting on the Fed

Waiting on the Fed

June 04, 2024

One of our main contentions in recent months is that the Federal Reserve, by switching from a scarce reserve model to an abundant reserve model, has completely taken over the short-term interest rates marketplace.

The Fed’s balance sheet has expanded from $870 billion in August 2008 to $7.2 trillion today, a staggering 733% increase, and has averaged 33% of GDP over the past four years, bigger than at any time in history.  It’s the 1000 lb. gorilla in the room.

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