The Fed’s Balance Sheet Reduction (QT) Update

Jerome Powell is the weakest Chairman in Fed history as he failed to push back on the historic fiscal excess of 2020 through today (approximately $11 Trillion in fiscal deficits over that period which drove record price inflation). QT was 99% bark and 1% bite. Further, the Fed went overboard with its stimulative efforts of 2020 - May 2022. There is far too much liquidity in the system. The Fed’s balance sheet needs to shrink by another $2 Trillion. Instead, prices are poised to move higher. Unfortunately, the Fed Chair that arrives next (I expect Trump to win the General Election and to replace Powell), will be an even bigger dove at a time when the country is dying for a Fed Chair that values real money, that values private markets, and is dedicated to protecting the value of our fiat currency in the absence of a gold standard.

• Treasuries: The Fed’s Treasury security holdings decreased by $5.1 billion for the week-ended September 18th. The Fed’s Treasury holdings declined by $15.1 billion on a rolling 4-week basis.

• Agencies: The Fed’s Government Agency security holdings declined by $68 million for the week-ended September 18th and declined by $14.4 billion on a rolling 4-week basis.

• The Fed’s balance sheet holdings: https://www.newyorkfed.org/markets/soma-holdings