The Fed

The fed is winding down debt at 50 billion a month and has now surpassed 500 billion. This is the pay back of the $5 trillion in quantitative easing that was instituted to fight the crash that started in 2008. This will slow down the growth in GDP but necessary to balance the central bank. The Fed has a balance sheet composed of assets, (US Treasuries and mortgage backed securities), and liabilities, (reserve deposits held in banks.) The Fed had been renewing these T bills when they came due but they are now not renewing at the rate of $50 billion per month. This will reduce liquidity and cause the economy to slow but if done at the proper rate will still allow for some growth, perhaps 2% or so.