Fed Balance Sheet: Whatever Chairman Powell Is Doing, It Is Not Quantatative Tightening

The latest H.4.1 report with the line items supposedly being wound-down highlighted:

1. Factors Affecting Reserve Balances of Depository Institutions

Millions of dollars

Reserve Bank credit, related items, and reserve balances of depository institutions at Federal Reserve Banks	Averages of daily figures			Wednesday Sep 14, 2022
	Week ended Sep 14, 2022	Change from week ended
		Sep 7, 2022	Sep 15, 2021
Reserve Bank credit	8,788,731	+      488	+  436,695	8,797,781
Securities held outright1	8,400,771	-    2,568	+  553,012	8,407,904
U.S. Treasury securities	5,687,814	-    3,889	+  303,203	5,687,031
Bills2	318,882	-    3,877	-    7,162	318,105
Notes and bonds, nominal2	4,893,074	0	+  256,914	4,893,074
Notes and bonds, inflation-indexed2	375,761	0	+   16,209	375,761
Inflation compensation3	100,096	-       13	+   37,240	100,091
Federal agency debt securities2	2,347	0	0	2,347
Mortgage-backed securities4	2,710,611	+    1,322	+  249,810	2,718,526

....MUCH MORE

Beginning September 1 the idealized rate of reduction for treasuries is $60 billion per month/$2 billion per day; and for Agency MBS's the target is $35 billion per month/~$1.1 billion per day. We say "idealized" because the run-off is naturally going to be lumpy, depending on what paper is maturing, when. 

So instead of a $14 billion decline in the treasury portfolio we see a $3.89 billion decrease and in the Agency MBS's an INCREASE of $1.3 billion vs. the idealized $7.7 billion decline. A combined shortfall of almost $19 billion for just the most recent week.

Unfortunately, the pattern we see in the H.4.1 has been going on since the kick-off of QT on June 1. Massive shortfalls in the amount of paper removed in both the government issues and especially in the MBS portfolio.

This is not the QT we were promised.

From the Federal Reserve Bank of St. Louis' FRED database a graphic depiction of the Fed's assets which includes such things as interest and other receivables due the Fed, not consequential for the QT effort but which can move the weekly change numbers for the total balance sheet:

The April 13, 2022 peak in the assets was 8.965 trillion but the formal QT did not start until June 1 with the balance sheet at $8.915 trillion.

Meaning the total reduction in the balance sheet, including all the smaller line items is $8.915 trillion minus $8.832 trillion equals $83 billion or less than 1% of the starting value.

At this rate it is going to take a couple decades to fix the problem that Bernanke, Yellen and to a far lesser extent, Powell, created.

If interested see September 12's "The Fed, QT, And The Coming Housing Bubble Disaster" for links on what this all adds up to.

Which implies the U.S. economy is in far worse shape than we have been led to believe, if all the slow-down we are seeing has happened without QT.

There are a couple reasons to think next week's report might show the Fed picking-up the pace but if it doesn't happen, large-x-large, we'll have to conclude that, in the words of the philosopher (Phil Collins anyway):

...Well, I was there and I saw what you did
I saw it with my own two eyes
So you can wipe off the grin
I know where you've been, it's all been a pack of lies