Hey, what you think of this:
The Fed has now announced that rather than continuing reinvest the proceeds from its maturing debt securities, going forward every month it will let $10 billion ($6 billion in Treasuries and $4 billion in mortgage-backed securities) “come due” and NOT reinvest the money.
Put another way, going forward the Fed will be withdrawing $10 billion in liquidity from the financial system every month.
This amount will increase by another $10 billion next quarter (bringing the monthly withdrawal of liquidity to $20 billion in 4Q17) and another $10 billion the following quarter (bringing the monthly withdrawal of liquidity to $30 billion in 1Q18).
Put simply, according to the current plan, the Fed will be:
1) Withdrawing $90 billion in liquidity in 2017 (three months of $10 billion per month and three months of $20 billion per month).
2) Withdrawing $510 billion in liquidity in 2018 (three months of $30 billion per month, three months of $40 billion per month, and six months of $50 billion per month).
