The Federal Reserve’s balance sheet now tops $3 trillion, a new record. The Fed has increased its purchases of Treasuries and mortgage-backed securities as part of its so-called quantitative easing strategy to revitalize the economy.
“Three trillion is not a lot of money today… because the financial markets are so big,” says Chris Whalen, executive VP at Carrington Investment Services. (The face value of the global derivatives market alone is estimated at $1.2 quadrillion, equivalent to $1,200 trillion.)
But Whalen is not a fan of the Fed. FOMC policymakers “are making it up as they go,” he says, adding that they're acting more like the Marx Brothers with their ad-lib antics rather than serious regulators.
“The Fed and the Treasury are the biggest source of systemic risks today…. creating another bubble potentially in housing and perhaps also in equities," Whalen notes.
He wants the Fed “to explain a little better just why they’re doing what they’re doing.” Under the law, the Fed’sRead More »from Federal Reserve Policymakers Are Acting Like “Real Life Marx Brothers”: Chris Whalen