The recent meeting minutes from FOMC indicate that the Fed does not intend mortgage-backed securities (MBS) it has accumulated on its balance sheet for the sake of providing liquidity to the financial system. However, if the Fed keeps these securities on its balance sheet, this will increase money supply and cause a potentially serious inflation problem. The correlation between money supply and inflation is very high and shouldn't go unnoticed. Quantitative easing has already inflated the Fed balance sheet to more than $3.0 trillion and its continuation will only make inflation soar higher. (VIEW LINK)
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