An end result of the Federal Reserve's quantitative easing programs, including operation twist, is the Fed's balance sheet has swelled with the growth in U.S. treasury holdings. In 2011, the Fed purchased over 60% of all the treasuries issued by the government. A recent Bloomberg comment notes the Fed now owns over 37% of all treasuries with maturities greater than 5-years.
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| From The Blog of HORAN Capital Advisors |
Source: Bloomberg Surveillance
This is certainly a path that is unsustainable before reaching a tipping point. In order to continue down this path, the dollar printing press will need to run at full speed with an end result a further weakening of the U.S Dollar and consequent higher inflation.
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