The program does not, as Trump suggested a few days ago, pull $50 billion a month out of the economy.
In mid-2017, central bank officials decided the economy was strong enough that it could reduce some of its holdings. It would do so by allowing a capped level of proceeds from all those bonds it was holding to roll off the balance sheet each month, rather than reinvesting them as had been the policy.
The money, though, isn't coming out of any tills but simply is from bond proceeds held at the Fed that are not being pumped back into the system. And it's not $50 billion a month. In the May 23-June 27 period, for instance, the reduction in the two items was just $36 billion, or just less than 1% of the total holdings and less than 0.2% of the total U.S. economy.
Looked at from another angle, The Chicago Fed's National Financial Conditions Index, which examines risk, credit and leverage, is actually lower now, at -0.85, than the 0.79 reading where it was on Sept. 29, 2017, before the QT exercise began.
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