QT - Not so fast, please

“Did you see the Fed’s announcement that it will stop QT and begin QE,” asks legendary investor Ray Dalio, the founder of Bridgewater Associates, a provocative, and arguably false, characterization of what the Fed is doing.

He is right that the Fed will stop its quantitative tightening program of reducing the size of its balance sheet, now nearly $7 trillion, on Dec. 1.

“More specifically, if the balance sheet starts expanding significantly, while interest rates are being cut, while the fiscal deficits are large, we will view that as a classic monetary and fiscal interaction of the Fed and the Treasury to monetize government debt,” says Dalio in a LinkedIn post. 

And if that happens when private credit and capital-market credit creation are strong, stocks are at highs, credit spreads and unemployment are near lows, inflation is still highs and AI stocks are in a bubble, “it will look to me like the Fed is stimulating into a bubble.”

Steve Goldstein MarketWatch 6 November 2025

https://www.marketwatch.com/story/ray-dalio-is-back-with-a-fresh-warning-and-its-about-the-feds-new-policy-3362e20b


Can a central bank make $2.5trn of cash vanish without anyone much noticing? 

QT is as QE in reverse.     februari 2023

https://englundmacro.blogspot.com/2023/02/can-central-bank-make-25trn-of-cash.html



Fed to end quantitative tightening
https://englundmacro.blogspot.com/2025/10/fed-to-end-quantitative-tightening.html


QT - Not so fast, please

The Federal Reserve may need to suspend the process of shrinking its balance sheet if liquidity drains too quickly from markets    september 2025

https://englundmacro.blogspot.com/2025/09/qt-not-so-fast-please.html


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