The Fed should unwind its expanded balance sheet quickly by gradually selling mortgage-backed securities, which is feasible without disruption because banks hold ample excess reserves to buy longer-term securities; the obstacle is political, not economic, since selling MBS while the economy struggles is hard to defend.

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Speaker

John Taylor

Evidence Quote

so go at it gradually I think politically it's hard for the Fed that is that could they'll be seen to be selling mortgage mortgages

Source

John Taylor on the State of the Economy 07/19/2010EconTalk
Created: 6/15/2026, 9:17:28 AM

My Notes

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