It is going to be interesting to see exactly what happens with the Federal Reserve’s balance sheet under Janet Yellen. Ben Bernanke has decided to pass the buck down the line for her to decide when to taper the $85 billion in monthly bond buying under quantitative easing.
We do not yet have the full details of a compromise for the debt ceiling, but it seems obvious that a resolution is going to be found that will reopen the federal government and which will allow the United States to pay its bills. The reality is that the Federal Reserve’s balance sheet is getting closer and closer to having $4 trillion worth of assets. It also now seems more than possible that quantitative easing will go on much longer than expected even just a month ago.
The Federal reserve even admits on its weekly balance sheet analysis, “Since the beginning of the financial market turmoil in August 2007, the Federal Reserve’s balance sheet has grown in size and has changed in composition. Total assets of the Federal Reserve have increased significantly from $869 billion on August 8, 2007, to well over $2 trillion.” That is an old figure because it is now over $3.75 trillion.
The full figure as of October 9, 2013 was $3.7586 trillion. The $85 billion per month plus the rollover maturities is adding to this each and every month. At some point this will be real money to someone. By the way, of that $3.7586 trillion in assets some $3.4895 trillion are listed as securities held.