Zortix matched this thesis to Rates & bonds ETFs as one way for retail investors to get exposure. Not a recommendation.
Shrink Fed balance sheet by $1-2 trillion
The guest argued the Federal Reserve's balance sheet could be reduced by $1-2 trillion by first reducing banks' demand for reserves, allowing supply to shrink without causing undue stress in short-term funding markets.
Keep reading this one
You've read the thesis and who argued it. A free account opens the argument, what validates it, the risks the show raised, and the moment in the episode where it was said — 3 ideas in full a day, no card.
The Callback
Fed's pause and reduced guidance steepen yield curve
24 weeks between these two statements.
The guest argued that maintaining an 'ample reserves' regime with a large balance sheet creates political economy costs and invites other government entities to use the Fed's balance sheet for politicized purposes, threatening its independence.
The guest argued the Federal Reserve's balance sheet could be reduced by $1-2 trillion by first reducing banks' demand for reserves, allowing supply to shrink without causing undue stress in short-term funding markets.