Also you’re probably going to know one little bit of hard-to-decipher jargon tossed around: “balance sheet normalization. In the event that you just casually follow Federal Reserve news, ”
That’s as it’s come back into focus amid disorder in an elaborate, yet significant part of the system that is financial once the repo market.
But although it’s difficult to get a dictionary that translates what central bankers state into everyday English, that isn’t a subject to ignore. This wonky term has major implications for the U.S. Economy, the stock market, monetary policy and your pocketbook while most consumers focus on how the Fed impacts borrowing costs.
Here’s everything you need to find out about the Fed’s stability sheet, including just what it really is, why it is crucial as well as why it’s been right right right back into the news lately.
The basic principles of balance-sheet normalization
More broadly, “balance sheet normalization” is the Fed’s efforts to downer from the huge holdings of assets it purchased about ten years ago to help keep the economy afloat through the crisis that is financial.
In November 2008, then-Fed Chairman Ben Bernanke encountered a panic that is financial.