|Respectfully, I fundamentally disagree:|
How did the balance sheet get so big that it's now a quarter the size of our entire economy? It was built up over eight years of buying Treasury and mortgage bonds, in the mistaken notion that massive Fed cash infusions into those markets would bolster the economy and foster a return to normalcy.This was NOT done for the economy. It was done to shore up the banking system. The economy will eventually take care of itself. Without a solid banking backbone, there would be no economy or the turmoil created would massively disrupt whatever economy is out there.
Instead, like a patient put on a respirator for too long, the economy didn't thrive. During the Fed's balance-sheet buildup and its zero-interest rate experiment, the economy grew at a tepid 2% rate, a full third below its long-term average. During that period, as a result, the U.S. by our own conservative estimate suffered the loss of at least $2.3 trillion in potential GDP growth. These policies stimulated nothing.
The FED talks about the economy and other aspects of our system like GDP. But their main focus, above all others, is to keep the banking system afloat and as strong as possible. The FED is run by bankers, for bankers.
JMO.... Watch what the FED does. Not what they say.