Ever since the U.S. Federal Reserve began its controversial quantitative easing program – which has involved using newly-minted dollars to purchase a variety of debt instruments like mortgage-backed securities (MBS) and Treasury bonds – financial experts have warned about a ballooning central bank balance sheet that could disrupt that organization’s ability to act during an economic crisis. Now, according to data published last week by the Fed, the amount of government debt has reached a record high of nearly $1.7 trillion.
A Bloomberg News report published on January 24 showed the total amount of assets held by the central bank reached $3 trillion, most of it in the form of MBS and Treasuries. Several iterations of “QE” have been enacted, and the most recent form – begun in September of last year – has seen an addition of $85 billion per month.
The Federal Reserve, in its weekly release of statistical data, showed a $78 billion increase between January 30 and February 8. Broken down into categories, nearly $21 billion came from its Maiden Lane LLC series of holding companies. These entities, according to the U.S. government, contain many of the assets acquired during the 2007-2008 financial crisis that have yet to be sold. Another $103 billion dollars from the “Central Bank Liquidity Swaps” section signify that the Fed has been engaging in significant activity with other monetary organizations around the word.
These developments highlight the fact that the Federal Reserve continues to play a powerful role in the U.S. economy. As such, keeping a close eye on these shifting numbers is important for investors as they may need to adjust their positions in light of these alterations. Stay informed by continuing to read the GreatWealthStrategies.com blog for more updates on finance news, wealth preservation tactics and other necessary insights.