Since the 2007 financial crisis the Fed’s portfolio of Treasury and mortgage-backed securities has grown
tremendously, from $900 billion to more than $7 trillion today. In recent years there has been much discussion
about how and how quickly the Fed may begin reducing the size of its balance sheet. What is the Fed’s
balance sheet? What’s your take? Should the balance sheet be smaller?
Please see the links below for some useful background.
https://www.bankrate.com/banking/federal-reserve/federal-reserve-balance-sheet/
https://www.cnbc.com/2017/04/06/fed-balance-sheet-what-happens-why-it-matters-what-could-go-wrong.html
Hopper, L. (2018, July, 11). How the fed is reducing its balance sheet—and why. Retrieved from
https://www.stlouisfed.org/open-vault/2018/july/how-fed-reducing-balance-sheet
Ng, Michael. Wessel, David. (18, August 2018). The Hutchins Center Explains: The Fed’s balance sheet.
retrieved from https://www.brookings.edu/blog/up-front/2017/08/18/the-hutchins-center-explains-the-fedsbalance-sheet/
https://www.brookings.edu/blog/ben-bernanke/2016/09/02/should-the-fed-keep-its-balance-sheet-large/
Sample Solution