Powell Says Fed Wants to Return Balance Sheet to Normal Level

The transcript discusses the Federal Reserve's approach to managing its balance sheet by letting securities roll off rather than selling them. It highlights the goal of returning the balance sheet to a more normal level, influenced by public demand for currency and reserves. The current balance sheet is under $4 trillion, significantly larger than pre-crisis levels due to increased currency demand. The discussion also reflects on the Fed's actions during the Great Recession, noting the success of quantitative easing and other government measures in preventing a global financial collapse.

What is the Federal Reserve's strategy for managing its balance sheet?

• Reducing public currency demand

• Increasing the balance sheet size

• Letting securities roll off

• Selling off securities

How does the current size of the Fed's balance sheet compare to pre-crisis levels?

• It is larger than pre-crisis levels

• It is not influenced by public demand

• It is smaller than pre-crisis levels

• It is the same as pre-crisis levels

What factor significantly influences the size of the Fed's balance sheet?

• International trade

• Government spending

• Public demand for currency

• Interest rates

What was one of the key outcomes of the Fed's actions during the Great Recession?

• A collapse of the global financial system

• Stabilization of the financial system

• Increased unemployment

• Decreased government intervention

What lesson did the Fed learn from its response to the Great Recession?

• The importance of reducing currency supply

• The effectiveness of quantitative easing

• The benefits of maintaining a large balance sheet

• The need for less government involvement