September 20, 2017

The Federal Reserve’s printing presses have, in large part, been responsible for the run-up in stocks since the financial crisis. Now the presses are about to stop. Will stocks crash? Let’s explore that question.

Chart

Please click here to see an instructive chart — that of the Fed’s total assets. Notice how assets ballooned from under $1 trillion to $4.5 trillion. The continued excitement in the stock market shows that investors believe the Fed will execute its plan to unwind its massive balance sheet in a manner that will allow the stock market to continue its march upwards.

The Fed’s balance sheet primarily consists of bonds that it bought in a program known as quantitative easing.… Please click here or the title below to read more.