But it’ll probably help fix a lot of distortions in the markets, including housing. I hope President Trump doesn’t try to interfere with that process like he did his first term when he frequently and consistently berated Powell to repress rates when they were in the process of normalizing the balance sheet in 2019. He knows that artificially low rates juice the stock market and assets and make them look good, I worry a bit he’d be tempted to go there again. Hopefully though, given the inflation and market distortions we’ve seen, he won’t do the same again and will just let the process run. I think it’ll be a bit of a painful process (Especially IMO, these coming years after ON RRP’s hit zero and liquidity really starts to be impacted as they bring reserves from “abundant” down to “ample” levels), but it’s necessary.

But there are multiple distortions still in the market and things that need to correct. That may all play out in the next few years, and getting all those assets off the fed balance sheet over the next years is a big one.