In my last post I said that the Fed hasn't really started tightening yet, based on its still very bloated balance sheet. We know that ιτ has promised to increase Quantitative Tightening (QT) to a maximum of $95 billion per month, but judging from the numbers it hasn't done so yet.
But, let's say that it bites the bullet and it starts tightening for real.
How long will it take it to reduce its balance sheet to some version of normalcy? The chart below helps put things in context - the Fed's assets as a percentage of GDP currently stand at a record 36%, double than in 2019 and a massive 7 times (!) higher than in 2009, when the Fed stepped in to avert what could have become a second Depression during the Great Debt Crisis.