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The Fed’s balance sheet
The Federal Reserve’s portfolio of Treasury and mortgage-backed securities has more than quadrupled over the past decade. In June, the Fed announced a plan for beginning to shrink the balance sheet, and most market participants expect the Fed to pull the trigger on this process at its September 19-20 meeting. Currently, the balance sheet stands at over $4.5 trillion, much larger than its pre-crisis peak of around $925 billion. How did the balance sheet get so big and why does the Fed want to shrink it? And to whom does it matter? WHAT IS THE FED’S BALANCE SHEET? Like any entity, the Federal Reserve has ... (full story)