The Fed's Breaking Point

James FoordInvesting Group LeaderFollow5ShareSavePlay(7min)CommentsSummaryThe Federal Reserve has effectively resumed QE, expanding its balance sheet by $40 billion to support government financing and asset prices.The primary constraint on continued stimulus is inflation and long-duration Treasury yields, not growth or employment.Historical precedent shows that yield suppression only works while inflation remains contained; a breaking point emerges if inflation expectations rise.Secular deflationary forces, such as demographics and AI, may counterbalance inflation risks, but investors must monitor for a tipping point. peshkov/iStock via Getty Images Thesis Summary Although it won’t be openly admitted, the Federal Reserve has restarted QE even if it refuses to use the term. The balance sheet is expanding again, to the tune of $40 billion, until around the timeThis article was written byJames Foord26.26K FollowersFollowJames Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth.

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