Ombow, They aren't predicting March 24th, that's just what a You-Tuber titled his video in order to get more views.
QT/Quantitative Tightening actually started last Fall (October). The Fed is increasing the amount of QT every month until by the end of 2018 their reduction in bond purchases will reach an annual rate of $600 Bil. It starts out slow and builds gradually each month. It's the opposite of QE, and shrinks the money supply and 'normalizes' the Fed's own balance sheet.
This QT is being done at the same time the Fed is also raising interest rates 1/4 point every quarter, which they plan to do for the next 2 years, thus returning rates from the current 1.5% back to a more normal 3.5%.
Historically the Fed has needed to drop interest rates by 3-4% in order to successfully deal with a recession. Until rates are normalized back to around 3.5%, the Fed fears it will be unable to deal with a recession. The Fed is simultaneously trying to normalize their bloated balance sheet, which ballooned from $800 Bil to $4.4 Trillon when they bailed out the world financial system during the 2008 crisis.
So the Fed is trying something they've never done before - doing QT while simultaneously raising interest rates. The danger
is that they'll induce the recession they're trying to avoid.
To counterbalance the QT and higher rates, they encouraged Congress to scrap the remnants of fiscal restraint (the 'sequester'), and instead institute huge new budget deficits. They also backed the big Trump tax cuts. The Fed hopes that these stimulatory measures will offset the Fed's QT and higher interest rates. In this way the Fed will try to normalize both interest rates and their own balance sheet without inducing a recession.
But there's more..
(continued)
