Federal Reserve Balance Sheet
The Federal Reserve Balance Sheet, also known as the H.4.1 statement, is a weekly report that provides a consolidated statement of the condition of all the Federal Reserve banks, in terms of their assets and liabilities. This report contains details concerning the implementation of the monetary policy, including a large number of distinct assets and liabilities with a great deal of information about the scale and scope of the Fed’s operations. The Fed’s balance sheet are being utilized to orchestrate and execute some of its nontraditional policies – expanding to stimulate the economy, and shrinking to stabilize it.
- Before the 2008 Financial Crisis it grew at roughly the rate of GD Growth
- Was roughly the same as GDP
- After 2008 the balance sheet grew many times faster than GDP (it exploded)
- Line looks vertical on a chart - not slow growth
- Concern that this drove up asset prices
- Over 94 years the balance sheet slowly grew to roughly 900 Billion pre 2008
- After the 2008 Meltdown, the balance sheet grew by 1.4 Trillion in just 94 days (under Ben Bernanke)
- Cause a reflation and recovery of financial markets
- Reshaped how the US financial system looks since