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IPFS News Link • Federal Reserve

Fed Policy Setting Country Up For Monetary Disaster

• News Wars

In fact, it never could extricate itself from the extraordinary monetary policy it launched during the Great Recession.

Today, we're merely witnessing the same policy on hyperdrive. And there is still no way out.

After blowing up its balance sheet to over $4 trillion during the Great Recession, the Fed tried to pull back. Through quantitative tightening, the Fed managed to get it down to just over $3.7 trillion before the stock market tanked in late 2018 and the central bank abandoned its plans to normalize monetary policy. At that point, it ended balance sheet reduction and dropped interest rates three times the following year. Not only that, it relaunched quantitative easing, although the central bankers kept insisting it wasn't QE.

Most people assume the Fed started growing its balance sheet again as an emergency measure in response to the COVID-19 pandemic. But the balance sheet was already back over $4 trillion before coronavirus even reared its ugly head. The pandemic pressed the easy-money accelerator to the floor and today the Fed balance sheet is over $7 trillion


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