Projection Of Fed Purchases From Goldman

Submitted by: Colin Lokey
       As you should know by now, virtually no analysts believe Operation Twist will end in December. What is going to happen is that the Fed is going to run out of short-term paper to sell to offset (sterilize) its long-term purchases and it is simply going to purchase long-term Treasury bonds and not worry about the sterilization part (inflation, up, up, and away). So you will have simultaneous, monthly purchases of Treasury bonds and MBS for quite sometime and when all is said and done the Fed's balance sheet ends up somewhere in the neighborhood of $5 trillion (see here). Along these lines, here's Goldman's projection for the next three or so years of asset purchases:



Source: Goldman Sachs via ZeroHedge

 

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