The Fed’s Balance Sheet Isn’t Just Big—It’s a Control Mechanism Let’s cut through the polite language. When economists talk about the Fed’s $6.7 trillion balance sheet, they frame it like a technical problem—too many assets, too many reserves, time to “normalize.” But here’s the reality: That balance sheet is a direct lever of control over the financial system. Before 2008, the Fed was a background player—about $900 billion in assets, barely 6% of GDP. Today? It’s north of 20% of GDP, embedded in everything from mortgage-backed securities to emergency lending facilities. That’s not just growth. That’s dependency. Markets don’t just react to the Fed anymore—they rely on it. Kevin Warsh’s Plan: Shrink the System Without Breaking It Kevin Warsh wants…
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