Loading ...Remember back in 2007 when everybody said, “There’s no way the Fed will start buying assets willy-nilly! That’s outside the scope of their charter! UNPOSSIBLE!”
Then over the next decade the Fed balance sheet proceeded to swell by $4 Trillion.
Fast-forward to 2017. “There’s no way the Fed can maintain this balance sheet! They HAVE to start unloading these assets! It’s just a matter of time! The alternative is UNPOSSIBLE!”
In fact there will be no unwind. Instead we will see another massive step-function increase in the Fed balance sheet. They will buy whatever they have to buy– bonds, stocks, hell…maybe even gold, if they absolutely have to. We know this because history tells us so:
2009: Massive spike up
2009 to 2011: Plateau
2011: 60-degree-slope ramp up
mid-2011 to 2013: Plateau
2013 to 2015: 60-degree slope ramp-up
2015 to 2017: Plateau
2017: Which will it be, a massive spike up, or another 60-degree-slope ramp-up into 2019?
