$10 trillion to keep Ponzi alive Someone will write a movie about this utter circus after our 1929 . Fed balance sheet targeting $10 trillion by end of 2021 . Without fed buying yields would super spike as sovereign fundamentals are sharply eroded as is willingness of foreign buyers to step up. The fed keeps us debt addicts on the juice and not appreciating the true cost of borrowing - so in that sense encouraging malinvestment via their subsidy . The market would be sending very loud signals already to slow down spending !!
We estimate the Fed will end 2020 with a balance sheet of about $7.4 trillion. Moreover, we expect the Fed to be very active in 2021 with expanded purchases of U.S. Treasury securities to cushion the impact on the markets of subsequent rounds of fiscal stimulus and massive Treasury issuance that is expected post-election. We could see the Fed’s balance sheet expand to between $8.5 trillion and $10 trillion by the end of 2021 depending on the size of the U.S. budget deficit.