WASHINGTON, D.C. Jan. 28 (DPI) – The Federal Reserve saved the US economy from likely ruin in 2008, injecting billions of dollars of cash to stabilize the nation’s financial markets, but the long-term consequences of that action haven’t quite been felt: The central bank continues to manage a bloated balance sheet of securities exceeding $4 trillion, almost five times what it carried before the financial crisis ten years ago, and some investors are nervous the debt-heavy Fed is beginning to squeeze the capital markets.

The Fed’s plan back in September 2017 was to slowly sell – about $50 billion per month – Treasury and mortgage securities back into the marketplace, paring its holdings and reducing a balance sheet that reached $4.5 trillion.

But in recent days, the Fed has indicated that its debt-reduction program has cut its balance sheet by only $500 billion, and has no plans now to aggressively continue to de-leverage. This is at the same time the Fed is buying more Treasury securities to finance a ballooning federal deficit.

Reader comments were scathing in their criticism of the central bank and its policymakers.  The most popular comment on WSJ.com: “The wizards at the Fed have no idea what they’ve done or how to fix it.”

Other most recommended comments:

In other words; the wizards at the Fed have no idea what they’ve done or how to fix it.

The Federal Reserve must get out of the market manipulation business!
Mr. Bernanke’s money printing QE monetary policy was all about manipulation of markets.
Long term , market manipulation by government officials ( like the Fed ) is detrimental to long term growth.
Price transparency is a key factor in how businesses are run.
Forever ”Tricking “ businesses by manipulating market prices threaten our long term prosperity .
The Fed must reduce their money printing reserves to the equivalent to where it was before Bernanke went on his scheme.

The real problem is the unsustainable national deficits, debts, trade deficits and dysfunctional society that rewards bad behavior.
Inflation/money printing is just a symptom/band-aid, just like it was during the decline of Rome.

Fed Balance Sheet Pre 2008 was $900 Billion. Went up to $4.5 Trillion. Will only contract to $3.5 Trillion. Maybe.
In other words, there is no contraction.  Just monetary base expansion from $900 Billion to $3.5 Trillion.
When was the last time $2.6 Trillion was added to monetary base? Never.

This news is hiding a simple fact – that the Fed is admitting that it can’t de-leverage  without seriously disrupting this fragile economy.
We are in uncharted territory.  Hold on to your hats!

Kansas City Fed President Esther George states that “a lot of heavy lifting has been done” and the committee is trying to determine if the committee has a “sufficient understanding of what all the moving pieces are”.
So at this stage we have over $70 trillion in total credit market debt (and rising), an out of control federal deficit and a Fed that could only muster a little over 200 basis point of interest rate increases.  And the FOMC is now trying to figure out what all of the moving pieces are?
I guess I’m not at all comforted that the esteemed members of the Federal Reserve has any idea of what their policies have created and how in the world to get off of this debt creation tread mill.