There’s a lot of concern these days about shrinkage. No, not Seinfeld shrinkage. We’re talking about Federal Reserve Balance Sheet shrinkage and how the Fed might go about reducing the size of its balance sheet.
When the Fed started expanding their balance sheet in 2008 during the financial crisis there was a great deal of outcry and misinformation floating around. I wrote about 10 billion posts on this trying to clear up the misunderstandings. Let’s review the basics in case you missed it:
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