Finally, some participants noted that if the very large size of the Federal Reserve’s balance sheet led the public to doubt the Committee’s ability to withdraw monetary accommodation when doing so becomes appropriate, the result could be upward pressure on inflation expectations and so on actual inflation. To mitigate such risks, it was noted that the Committee should continue its planning for the eventual exit from the current exceptionally accommodative stance of policy.
Oh do come on. The entire economy is resting on a 12% of GDP federal deficit! Pull it - or the accommodation that allows it - and the economy is going to collapse. And oh by the way, estimates for this year on that deficit are $2 trillion - up from $1.7 trillion.
But the real stunner is right here. This chart, which The Fed now has on record, is the defined and absolute proof that they know with absolute certainty that the path the government is on, and the World Economic Forum said we needed to be on (that is to double both government and broad economic debt) cannot possibly work.
Why not? Well, here:
At the outside in the longer run they believe we will see 2.8% GDP growth. Over the next nine years this means we will see 28.2% growth in GDP, all-in.
Debt is projected to have to double to produce this on a government and systemic level? That means debt-carrying costs will have to double against an increase of 28% in output.
Like hell that will happen. We hit the wall in 2007 as a consequence of inability to cover debt service.
Folks, the FOMC put you on notice with this set of minutes: They know this is going to blow up, they expect it to blow up, and there is no way to avoid it blowing up as carrying costs will double while the output to cover it will grow by less than 30%.