[Chart]: The Federal Reserve Is Deflating

After QE3, the Federal Reserve began holding the monetary base fairly steady at around $4 trillion.

In the last 12-months the Fed seems to have begun unwinding some of its holdings. monetary-base

It helps to show the monetary base with a “zoomed out” chart in this case because it makes the signs of a deflationary trend more pronounced when you can see the 2008 crisis and the steep climbs with each round of QE.

This is truly uncharted territory, but it tells us two things: the next president, whether it’s Clinton or Trump, will face a big recession. People will blame the presidency instead of the Federal Reserve, and we will have only a one-term Trump or Clinton presidency.

It also tells us that we might want to stock up on some US dollars.


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