The Fed's Balance Sheet: How Big Does It Get?

Mish

As of May 6, 2020, the Fed's Balance Sheet has ballooned to $6.72 Trillion.

Since February 26, the Balance Sheet has grown by $2.56 trillion. 

Where does it stop?

Fed's Balance Sheet Detail 2020-05-11

How Big Does It Get?

Mish

Comments (54)
No. 1-27
Whisper2018
Whisper2018

Sky is the limit as Neel kashkari said " your ATM is safe, your banks are safe. There's an infinite amount of cash at the Federal Reserve."

Sechel
Sechel

my unscientific answer: "Bigger" Another poster commented this is the Fed & Treasury engages in MMT. I think that was as good a summary as any

tokidoki
tokidoki

Since hyperinflation chances are zero. The correct answer is obviously 25 trillion and above.

Winston7
Winston7

Is the only reason to shrink the balance sheet so that they don't end up in a situation like Japan where there are limited assets to purchase? Why is it a problem if they buy assets and the issuer defaults?

numike
numike

“Blessed are the young, for they shall inherit the national debt.”
― Herbert Hoover

Tony Bennett
Tony Bennett

"How Big Does It Get?"

...

As big as necessary.

Ben Bernanke evolved when performing QE. First iterations had $$ amount and duration. Of course, Mr Market preferred no constraints ... and would throw tantrum when needed. Bernanke learned to leave QE open ended until some (at times moving) objective met. In other words, appease Mr Market ... no matter that it screwed Main Street bottom 80%.

Bernanke was The Market's B!tch ... and now Powell is ... until campaigning for the job Kashkari bends over Main Street.

Roger_Ramjet
Roger_Ramjet

Well, the Bank of Japan has grown its balance sheet to a size larger than that of the underlying economy (measured by GDP) while holding interest rates at zero, without any apparent ill effects (so far) and without significant growth or inflation to boot.

That will probably provide (false) comfort to our own Fed that they can at least mimic what Japan has done, right or wrong.

I think we have a long way to go, but most of the increase in the Fed's balance sheet will be monetizing our escalating national budget deficit.

BrainDamagedBiden
BrainDamagedBiden

6.5T + 4T+3T +3×2T= $19.5T.

Casual_Observer
Casual_Observer

This doesn't matter as we fly past 100k deaths.

ToInfinityandBeyond
ToInfinityandBeyond

To infinity and beyond if our esteemed president and federal reserve have their way.

TimeToTest
TimeToTest

This is an easy one.

Forever.

Casual_Observer
Casual_Observer

Why does it matter what the balance sheet is ? It is all just computer money anyway.

MRUNKNOWN
MRUNKNOWN

it lasts until they stop accepting cash or debit cards at the strip clubs

thimk
thimk

Oh I get it; this is the "new normal" everyone is talking about .

jivefive99
jivefive99

Perhaps it would help if every time we talk about the balance sheet we also mention why we care ... so the Fed balance sheet is rising ... so what?

Cajundoug
Cajundoug

Since the Fed has declared war on value investing, I have been asking my financial advisor what are the limits to money printing. He assures me that there are limits. I still don't see them. I'm interested to read the ideas here.

Bam_Man
Bam_Man

It will only stop when our overseas trading partners stop accepting the $USD created by the Fed out-of-thin-air to pay for their goods.

Your guess is as good as mine when that point is reached. The US military's job is to apply sufficient coercion/intimidation to delay that day of reckoning for as long as possible.

Worker
Worker

Who knows?

I suspect at some point taxes will end in order to stimulate the economy and the entire budget, including local, will be QE'd.

FromBrussels
FromBrussels

As long as we believe in the value printed on a piece of intrinsically worthless paper(or its digital version), evwythin gonna be awright, wonnit ?

Montana33
Montana33

Why did Fed assets increase between Sept 2019 and Feb 2020? Our economy was not in peril then. Was this reckless behavior to appease a President? Now we need it but what was their lame excuse for late 2019 asset expansion when assets should have declined? For now, we can get away with giant money supply expansions because everyone is doing it and we are still the reserve currency. I think the Fed will have to write off a lot of the debt it purchased if we want a viable financial future. Can they do that? That’s what I’m wondering.

awc13
awc13

will we see quadrillion in my life time?

tokidoki
tokidoki

It's sad to think that the Fed will only stop with a revolution, and since there won't be a revolution, the Fed will not stop.

RonJ
RonJ

"Where does it stop?"

The 12th of never?

Gman007
Gman007

Big enough to take ownership of everything...isn't that the goal established in 1913???

The size of the Fed's balance sheet doesn't concern me. What bothers me is the cost to increase the balance sheet. What is that cost?

I don't know of many private enterprises in this world that can build their balance sheets at little to zero cost...particularly on the scale and timing we are currently seeing.

Many global businesses subsidize their prices and costs of doing business in ways that aren't readily apparent thus tricking consumers of their goods and services. Like Walmart using Medicaid for healthcare benefits for their employees. Pharmaceuticals using government money to do or fund their research then claiming exorbitant costs when consumer pricing (500X mark ups on medications like insulin that have been around for decades) or claim they aren't making any money on vaccines when every corner market is advertising to inject w/o training or controls or immune testing.

But "the Fed" takes it to an exponential new level...

frozeninthenorth
frozeninthenorth

At one point the US Treasury will just print the stuff, and forget to account for it as a future debt. A lot easier that way, and with the numbers we are seeing now, it seems a reasonable option...since everything else is crazy.

The only objective seems to be to prop up the stock market...

Jdog1
Jdog1

The Fed is about out of ammo. There is a correlation between government debt and productivity, and the higher debt goes, the less production it achieves.
What people forget is that money is simply a way to keep score, but wealth is production.
The inflation scheme is supposed to keep people working paying off debt, much like the company store concept. The problem is as it progresses, it begins to reward people for speculating instead of working and producing.
Asset valuation get out of line with income and at some point people stop paying on their debts and the system collapses. That is where we are.
The next step is massive deflation to re-balance the system and then it will start all over...

Jdog1
Jdog1

The issue no one seems to understand is that the Federal debt must be serviced.
Debt service was nearly 20% of current Federal Spending before it went on this massive public give away. It is obviously going much higher and simultaneously tax receipts are declining. Add to that the fact that States and Municipalities are going to need trillions in bail outs and the Federal debt service is going to skyrocket.

The last time this happened, was the great depression and the only answer was to raise tax rates dramatically. Top tax brackets went to 90%.
So do not fool yourself, those government checks are not free money, you will pay for them with higher future taxes many, many times over.....


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