James Hamilton of Econbrowser has posted an interesting piece Signs of a Thaw in which he points out that the Fed balance sheet is shrinking:
Good news indeed, although I want do do a little work attempting to estimate the proportions of total debt that the Fed is financing. The last post in this series of notes was Financing the Fed’s Balance Sheet.
[…] in the US, that are currently held at basically no interest at the Fed; a hopeful sign is a recent shrinking of the Fed’s balance sheet; and if the Fed keeps spreads where they are – or follows my recommendation to slowly increase them […]
[…] up the slack. This would be an important step in removing the Fed from routine intermediation and shrinking the balance sheet. Across the Curve, however, cites some street chatter to the effect that the rollover will be a […]