Pooling Assets

"Just when I thought it was safe to go back in the water."
--Brantley Foster (The Secret of My Success)

Yesterday the Fed announced that it will begin unwinding the $4+ trillion of assets that it accumulated during its various 'quantitative easing' programs since the credit collapse. It will begin by selling $10 billion worth of paper in October and gradually increasing sales in subsequent months.

It is difficult to fully appreciate the enormity of the Fed's balance sheet. For instance, even at a $50 billion/month sell rate, it would take the Fed nearly seven years to unwind a $4 trillion book.

My sense is that the Fed is selling only because other central banks continue to buy. As shown in the graph above, BOJ and ECB balance sheet assets have blown past the Fed with no end in sight.

Central banks buying and selling assets to each other constitutes a modern day stock pool.