Brian Sack on the Fed’s Balance Sheet and How to Improve the Floor Operating System
Macro Musings with David Beckworth
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How to Determine the Ideal Size of the Balance Sheet
The size of the balance sheet affects long-term interest rates. I think you do want to get it down in size for several reasons, but one of which is that you want to be ready for the next time. QE is a tool that should be used when the primary instrument is constrained. And we just had two recessions where the primary instrument was constrained. That won't necessarily be the case in every recession.
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