Commentary 
“You hear that Mr. Anderson? That is the sound of inevitability.” – Agent Smith (The Matrix)
In the movie Matrix, the hero, Neo or Mr. Anderson, is eventually able to escape from the chokehold of Agent Smith and avoid a collision with an approaching metro train (the “sound of inevitability”). The Federal Reserve, with its balance sheet run-off program, or quantitative tightening (QT) announced on May 5, will not be so lucky.
I have detailed the process of QT in my previous article, so I will not dwell on the specifics of that here. But I will detail, why the plan of the Fed to shrink its balance sheet at a pace of 47.5 to 90 billion per month is the stuff of dreams, or nightmares to be exact. For this, we need to thoroughly understand how quantitative easing (QE) and QT programs have affected the financial markets.
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