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Balance Sheet AdjustmentsIn my prior post, I may have been somewhat misleading when I said that a reduction in the Fed balance sheet of $500B would be equivalent to a rate hike. I should have said a 1.0% rate hike, e.g. from 1.75% to 2.75%, according to Jim Puplava. http://www.financialsensenewshour.com/broadcast/fsn2017-0422-2.mp3 Obviously, a 1.0% move would be huge if done over a quarter. Indeed, even a reduction of $200B by the end of the 1st Q 2018 assuming the reduction program started in 2018 would cause me to start winding down of my portfolio, assuming the Fed funds rate was 1.5% at the end of 2017 as anticipated under the current Fed "dot plot." GLTA! Savannah |
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