Fed's Bullard Says Balance Sheet Higher Than It Should Be

The video discusses the Federal Reserve's balance sheet, which stands at $4.5 trillion, and the potential market volatility associated with its reduction. It suggests that the balance sheet is larger than necessary and proposes a gradual reduction to create policy space for future quantitative easing. The video also explores what a reasonable balance sheet size might be, considering pre-crisis levels and current cash reserves. The aim is to reduce the balance sheet to around $2 trillion over several years without causing market disruption.

What is the current size of the Fed balance sheet mentioned in the text?

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What policy change is mentioned that could help manage the balance sheet?

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What is suggested as an appropriate balance sheet size for the future?

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What was the balance sheet size before the crisis according to the text?

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How does the speaker suggest the balance sheet should be reduced over time?

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