The Fed may as well end QT. It has only trimmed its balance sheet by $1.03 Trillion since May 2022. This after growing its balance sheet from $4.0 Trillion in October 2019 to a peak of $9.0 Trillion in March 2022. The Fed’s balance sheet stands at $8.1 Trillion today. Yet we wonder why inflation is sticky and asset prices remain sky high. That’s what $5.0 Trillion of excess liquidity will do. All of that monetary slack distorts asset values, allows people to stay at home, funds mindless policies such as our border crisis, the war in Ukraine and subsidizes industry while hollowing out the value of the Dollar.

Going back on the Gold standard would be good for the Dollar, good for Americans, yet would kill the political class’s ability to buy votes through welfare programs and pay off the donor class. Therefore it won’t happen. The Dollar will eventually go to zero as has every fiat currency. The Dollar will lose reserve status on its way to zero. So, even if Powell does raise by 25 BPS next week, he has handled inflation with kid gloves first by causing it, then by running a laughable tightening program. End the Fed. End the mindless printing of fiat currency.

• Treasuries: The Fed’s Treasury security holdings declined by $6.2 billion for the week-ended September 13th and decreased by $24.8 billion on a rolling 4-week basis.
• Agencies: The Fed’s Government Agency security holdings were unchanged over the same period for the second consecutive week and decreased by $18.7 billion on a rolling 4-week basis.
• The Fed’s balance sheet holdings: https://www.newyorkfed.org/markets/soma-holdings
• Excel file: Our Excel file detailing the Fed’s holdings of Treasury and Agency securities: HERE.

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