Economic experts and political figures, including Senator Elizabeth Warren and analysts like NickTimiraos, are debating the Federal Reserve's monetary policy amid concerns about inflation and economic activity. The Fed has reduced its balance sheet by $1.34 trillion to $7.63 trillion, the lowest since March 2021, representing a 33% decrease in Treasury securities and a 24% decrease in MBS since the pandemic QE. Some argue that despite the balance sheet reduction of 14.6% since May 2022, further cuts are necessary for price stability. Critiques from sources like LibertyLockPod highlight a cycle of lowering and raising rates affecting housing prices and the economy. Senator Warren emphasizes that the Fed's rapid interest rate hikes have raised costs for working families and calls for lower interest rates to reduce these burdens, especially as inflation has potentially returned to the Fed’s 2% target.
They lower rates to zero Housing prices skyrocket They raise rates rapidly Prices decline only slightly Because they printed trillions So prices stay high So they demand that rates be lowered So prices go higher We are ruled by morons and thieves https://t.co/EMlZ4kUO8P
When the Fed hikes interest rates as quickly & as high as it has, it raises costs for working families. Just look at housing—mortgage rates go up, & so do rents when fewer people invest in building new housing. To bring down costs, the Fed needs to start lowering interest rates.
Reminder that the Fed needs to cut its balance sheet much more before there is price stability. The Fed’s balance sheet is down by -$1.3T or -14.6% since May 2022. But the balance sheet more than doubled by +$5T from $4T in March 2020 to $8.9T in May 2022. The balance sheet… https://t.co/DvSuJSZypV
Fed Balance Sheet QT: -$1.34 Trillion from Peak, to $7.63 Trillion, Lowest since March 2021. The Fed shed 33% of the Treasury securities it had added during pandemic QE and 24% of the MBS https://t.co/VQMXiRFiFy https://t.co/dc2pQ5kDV1
"If inflation has sustainably returned to the Fed’s 2% target, then real rates—nominal rates adjusted for inflation—have risen and might be restricting economic activity too much. This means the Fed needs to cut interest rates." @NickTimiraos https://t.co/X5ClLJCNvQ