Fed's Bullard Says Balance Sheet Higher Than It Should Be

The video discusses the Federal Reserve's balance sheet, which stands at $4.5 trillion, and the potential market volatility associated with its reduction. It suggests that the balance sheet is larger than necessary and proposes a gradual reduction to create policy space for future quantitative easing. The video also explores what a reasonable balance sheet size might be, considering pre-crisis levels and current cash reserves. The aim is to reduce the balance sheet to around $2 trillion over several years without causing market disruption.

What is the current size of the Fed balance sheet mentioned in the text?

What policy change is mentioned that could help manage the balance sheet?

What is suggested as an appropriate balance sheet size for the future?

What was the balance sheet size before the crisis according to the text?

How does the speaker suggest the balance sheet should be reduced over time?