I think the Federal Reserve is setting up investors for a significant
change in policy to be announced after Wednesday's meeting of the Fed's
Open Market Committee.
The new plan would resume the rapid growth of the Fed's balance sheet and push it to $3 trillion sometime in 2013.
And that would make the big problem facing the Federal Reserve and the U.S. economy even bigger. After expanding its balance sheet by buying what will soon be an additional $2 trillion in debt to help stave off the worst effects of the global financial crisis and then to support a stumbling U.S. economy, how does the Fed shrink its balance sheet back to something like normal size without crashing the U.S. and global economies?
Read more: http://money.msn.com/investing/how-feds-next-trick-will-hurt-bonds?page=0
The new plan would resume the rapid growth of the Fed's balance sheet and push it to $3 trillion sometime in 2013.
And that would make the big problem facing the Federal Reserve and the U.S. economy even bigger. After expanding its balance sheet by buying what will soon be an additional $2 trillion in debt to help stave off the worst effects of the global financial crisis and then to support a stumbling U.S. economy, how does the Fed shrink its balance sheet back to something like normal size without crashing the U.S. and global economies?
Read more: http://money.msn.com/investing/how-feds-next-trick-will-hurt-bonds?page=0
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