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Incoming Federal Reserve chief Kevin Warsh's ambition to shrink the central bank's multitrillion-dollar bond portfolio may quickly run into hard limits.
Why it matters: For nearly two decades, the Fed's ability to flood markets with liquidity has been among its most powerful crisis-fighting weapons — and, in Warsh's view, too often a go-to tool for monetary stimulus outside of crises.
The big picture: The Fed's assets ballooned from about $800 billion before the 2008 financial crisis to nearly $9 trillion at its 2022 peak — swelling each time the central bank stepped in to stabilize the economy, particularly through open-ended quantitative easing programs starting in 2012 and 2020.
