Fed’s QT: Total Assets Drop by $91 Billion from Peak (QE created money, QT Destroys Money) | Wolf Street

QE created money that the Fed pumped into the financial markets via its primary dealers, from where it began circulating and chasing assets, including in non-financial markets such as housing and commercial real estate. The purpose and effect were to repress yields and create asset price inflation. And it finally also helped create raging consumer price inflation.

QT does the opposite: It destroys money and has all the opposite effects – not for day-traders but over the longer term. QT is one of the tools the Fed is using to crack down on this now raging consumer price inflation.

In the 15 years of this chart, there are three crises: The Financial Crisis, the Pandemic, and now Raging Inflation. Today’s inflation crisis pulls into the opposite direction of the prior two crises, and dealing with it will require the application of the tools in the  opposite direction:

Fed’s QT: Total Assets Drop by $91 Billion from Peak (QE created money, QT Destroys Money) | Wolf Street