rukawa Posted September 10, 2017 Share Posted September 10, 2017 Currently the FED has a balance sheet with 4.5 trillion dollars. This means the banks have reserves of 4.5 trillion and the Fed as assets of 4.5 trillion. Presumably the Fed could pretty easily over time swap all non-government debt on its assets side with government debt. Instead of then unwinding their balance sheet the Fed could simply NOT unwind and rip up 4 trillion of the debt. Presumably they would want about half a trillion to conduct monetary policy. And that is it. Not sure why this wouldn't work. In fact I suspect the Fed will never unwind its balance sheet....so basically other than the tearing up..this is kind of already happening. Quote Link to comment Share on other sites More sharing options...
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