According to Odaily Planet Daily, Joseph Wang, a former trader in the New York Federal Reserve's open market division and now active on YouTube under the name "The Fed Guy," believes that after three years of balance sheet reduction, the Federal Reserve will most likely restart balance sheet expansion before the end of the year.

He disagrees with some investors who believe the Fed's move is aimed at preventing a collapse in risk asset prices, maintaining low Treasury yields, or even averting a liquidity crisis. He argues that if the Fed doesn't inject more liquidity into the system by purchasing securities, it will lose control over short-term interest rates, meaning it will no longer be able to set monetary policy.

According to Joseph Wang, strong repurchase demand and the ever-expanding TGA account will force the Federal Reserve to expand its balance sheet by $300 billion to $500 billion annually. (Jinshi)