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Politics : President Barack Obama
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To: RetiredNow who wrote (118858)8/21/2012 4:46:20 PM
From: Sr K  Read Replies (1) of 149317
 
Reinvesting principal is neutral. Doing what you suggest, "let the Fed balance sheet unwind without reinvesting the proceeds", is the opposite of stimulus. There will be a time to not reinvest principal, and let the balance sheet unwind. That time is not now, and the Federal Reserve knows what it's doing. That time cannot be until after January 1, after the last-minute actions by Congress are known. The "fiscal cliff" is potentially stimulative or constraining. The Fed acts in broad strokes and would never get into a position to be whipsawed by the election results or by the lapse of tax cuts and their reinstatement, partial or otherwise, by the next Congress.
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