Potential for Fed balance sheet to hit $17 trillion in future crises examined

Quick Take
According to data from FRED, the Federal Reserve’s balance sheet has expanded significantly since 2002, growing from $720 billion to $7.2 trillion. This represents a Compound Annual Growth Rate (CAGR) of 11% over 22 years. Interestingly, a recent insight from CryptoSlate indicates that the S&P 500 has also experienced a similar CAGR of 11%, suggesting that the S&P 500 grows at the same rate as the Fed’s balance sheet expansion. Meanwhile, the SPX has risen approximately 16% year-to-date. In contrast, Bitcoin (BTC) has shown a remarkable CAGR of approximately 63% and has increased by roughly 50% year-to-date (YTD).
Federal Reserve Balance Sheet: (Source: FRED)
Examining the percentage increases during the Quantitative Easing (QE) events in 2008 and 2020 provides additional context. During the 2008 financial crisis, the Fed’s balance sheet increased by 144%; during the COVID-19 pandemic in 2020, it grew by 137%. If a similar crisis were to occur and the Fed were to respond with another aggressive QE, the balance sheet could potentially reach around $17 trillion.
The post Potential for Fed balance sheet to hit $17 trillion in future crises examined appeared first on CryptoSlate.