| The Fed Confirms It Will Keep Creating Money |
| | At the December 10 FOMC press conference, Chair Powell quietly confirmed something extremely important: the Fed has begun expanding its balance sheet again — and plans to keep doing so on an ongoing basis.
In his Q&A remarks, Powell explained that even without any new financial crisis, the Fed believes it must increase Bank Reserves simply to keep pace with the growth of the financial system. His words were explicit:
“…there’s also a secular ongoing growth of the balance sheet… that alone calls for us to increase about $20–25 billion per month.”
That admission matters enormously.
At $25 billion per month, Bank Reserves would increase by roughly $600 billion over 24 months — almost exactly the amount I estimated in my recent Macro Watch video, The Fed Is Warming Up the Printing Press (published on December 2nd). |
| | In that presentation, I showed that if the Fed wants to hold its Total Assets at roughly 17% of Total Government Debt — the same ratio that prevailed just before the 2019 repo crisis — then it will need to expand its balance sheet by approximately $600 billion between now and the end of 2027, assuming no new crisis.
The Fed’s own statements now confirm that logic. |
| | Powell also made clear that this money creation is not just temporary. While the Fed is front-loading purchases to get through tax season, he acknowledged a “secular ongoing growth” of the balance sheet is required as the economy expands. In plain English:
The Fed plans to continue monetizing a significant portion of the government’s debt.
This is not a return to emergency QE — but it is a return to permanent balance-sheet expansion, even in calm conditions. And if market stress re-emerges, the pace of money creation would have to rise sharply, just as it did in 2019.
Macro Watch has been warning for months that tightening Liquidity could not continue indefinitely without forcing the Fed to reverse course. Powell’s remarks now confirm that the reversal is underway — and that the scale of money creation required is very close to what Macro Watch estimated in advance.
Subscribers to Macro Watch get early insight into these shifts — not after they hit the headlines, but while they are still being quietly prepared.
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