The Federal Reserve has managed only to shrink its US Treasuries balance sheet a tad. Fed Res bankers claimed they would shrink their recklessly formed balance sheet by $95 billion a month starting 1-June-2022.
Well here we are, two months later. The balance sheet has come down only −0.87% with respect to US Treasury holdings. That is not even one percent! Fed Res bankers actually have added 0.374% more mortgage-backed securities to their balance sheet!
What most fail to see is this: If the US economy functioned properly and if the US Congress functioned properly, the dollar sum for US Treasury new issuance and new issuance of mortgage-backed securities on the Federal Reserve balance sheet would be $0.
Chairman Powell and his supporting cast of Fed Res bankers lack credibility.
At this point, there ought to be laws that prohibit the Federal Reserve from running a balance sheet greater than a few percent of GDP, perhaps no more than 5%. Right now, the Fed Res balance sheet is 38% of current dollar quotation GDP.
How could anyone rationally believe the US economy is normal and has been normal since 2008 when the Federal Reserve has been responsible for the equivalent of 38% of the current economy?
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