Forget quantitative tightening - the Fed will double its balance sheet to over $16 trillion, boosting stocks
plan, which would roll back prior stimulus by shrinking the Fed's balance sheet. Instead, the Fed will return to its quantitative easing scheme, lifting stocks in the process, he added.
Howell noted that the Fed and other central banks earlier this year plowed liquidity into the global financial system during this spring's"But in coming years they will probably have to bailout debt-burdened governments, too," he warned. That's as developed economies are being faced with fresh pressure to expand public spending, as a renewed focus on military requirements and changing demographics weigh on budgets, he explained.
According to Congressional Budget Office estimates cited by Howell, the Fed's Treasury holdings would have to rise to $7.5 trillion by 2033 from nearly $5 trillion today."More realistic numbers point to required Fed Treasury holdings of at least $10 trillion. That translates pro rata into a doubling of its current $8.5 trillion balance sheet size and will mean several years of double-digit growth in Fed liquidity," he wrote.
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