The Fed will not be able to shrink its balance sheet in the short term because previous attempts at quantitative tightening in late 2015 caused repo market problems; longer-term balance sheet reduction would require banking system reforms to reduce required liquidity holdings, which could push liquidity out of banks into markets.

forecastpending

Speaker

Michael Howell

Evidence Quote

In the short term, the answer is no because they tried it once before in late '25. They started to take Fed liquidity down

Source

Massive Liquidity Shock Coming; Brace For 'Wrecking Ball' Warns Economist | Michael HowellDavid Lin
Created: 8/12/2026, 6:46:58 PM

My Notes

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