The Feds’ balance sheet has undergone explosive growth since Ben Bernanke stepped in as Federal Reserve Chairman. He retired this week, leaving the Feds with $4.1 trillion on the balance sheets. The Fed has become a political animal serving the politicians in charge.
The feds had assets of $834,663,000,000 in February 2006 when Ben Bernanke took over. They owned $748,840,000,000 in US Treasury securities and NO mortgage-backed securities. The feds now have $4.1 trillion on their balance sheet with over $1.5 trillion in mortgage-backed securities.
Most of the assets come from Bernanke buying up US Treasury securities and Fannie and Freddie mortgage-backed securities to stimulate the economy or, what is more likely, to keep it afloat.
Read about the Quantitative Easing (QE) at CNS News. QE’s brought us to this point.
QE’s are never-ending bailouts of the banks. Bernanke began to taper down from $85 billion a month to $65 billion.
Countries like China are buying less of our debt and Bernanke picked up the slack by monetizing our debt.
The feds can expand their balance sheet ad infinitum because they can print dollars. There is another $65 billion, $35 billion of Treasury securities and $30 billion of mortgage-backed securities, headed for the balance sheet as I write this.
Bernanke said the Feds can normalize the balance sheets but one has to wonder why haven’t they then?
What could possibly go wrong?