Your submission is now in Draft mode.

Once it's ready, please submit your draft for review by our team of Community Moderators. Thank you!

Submit Essay

Once you submit your essay, you can no longer edit it.

Pending

This content now needs to be approved by community moderators.

Submitted

This essay was submitted and is waiting for review.

Fed Trims Size of Asset Portfolio

Question

The U.S. Federal Reserve’s policy responses to the economic lockdown caused by the pandemic include massive bond purchases that make it cheaper for the government and corporations to issue debt, thus providing an important lifeline for financial activity at a time of difficulty.

This is creating a massive asset portfolio (“Reserve Bank credit”) that the debt holds, which was at $8.4 trillion as of Sep 29, according to this release. The concern is such steps may contribute to price bubbles in markets and economic overheating due to excessive risk-taking. The opposite concern is that a quick asset selloff may create a market glut, lowering the cost of raising capital for companies.

Will the Fed decrease the size of its accumulated asset portfolio below $8 trillion by 2023?

This resolves positive if, by Jan. 1, 2023, assets held by the Fed, according to estimates published here, are below $8 trillion.

Categories:
Economy – US

Make a Prediction

Prediction

Note: this question resolved before its original close time. All of your predictions came after the resolution, so you did not gain (or lose) any points for it.

Note: this question resolved before its original close time. You earned points up until the question resolution, but not afterwards.

Current points depend on your prediction, the community's prediction, and the result. Your total earned points are averaged over the lifetime of the question, so predict early to get as many points as possible! See the FAQ.