From SovereignMan.com – Today’s the day.
After months of preparing financial markets for this news, the Federal Reserve is widely expected to announce that it will finally begin shrinking its $4.5 trillion balance sheet.
I know, that probably sound reeeeally boring. A bunch of central bankers talking about their balance sheet. But it’s phenomenally important. And I’ll explain why-
When the Global Financial Crisis started in 2008, the Federal Reserve (along with just about every central bank in the world) took the unprecedented step of conjuring trillions of dollars out of thin air. In the Fed’s case, it was roughly $3.5 trillion, about 25% of the size of the entire US economy at the time. That’s a lot of money.
And after nearly a decade of this free money policy, there is more money in the financial system than ever before.