Fed Quietly Begins QE Unwind

https://www.birchgold.com/

Despite many doubting it would happen, the Federal Reserve has taken its first real step toward unwinding its balance sheet as promised back in June 14th.
In the first part of October, the Fed’s balance sheet actually increased, causing many to wonder if they were going to follow through. But by the end of the month, they had actually let $4 billion “roll off” their books.
What’s more, on October 31, the Fed unloaded a further $6 billion of $8.5 billion worth of maturing Treasuries it had been holding.


This is happening in stark contrast to what many believed would happen.
Concerned about their portfolios and real estate investments, many analysts doubted the Fed would actually follow through and unwind QE – even going as far as to say they couldn’t afford to do it.
Investors’ doubts were well founded. In 2013 and early 2016, the Fed flip-flopped to the market’s whims by cutting rates and restarting QE at the first sign of any trouble.
But the Fed is now on a mission to shrink its balance sheet and revive its credibility with the market.
However, this is more than just the Fed rebuilding its tarnished reputation. The reality is, if they don’t carry out their plans to unwind QE (also called Quantitative Tightening, or QT), they will be powerless to intervene should a crisis suddenly hit, deflating asset bubbles and threatening financial stability.
And after 8 years of economic expansion, with nearly the longest growth on record, an economic downturn is inevitable. The Fed needs to get ready now so that when the next crash happens, they’ll have room to “do something.”