By Bud Conrad, Chief Economist
"As you've undoubtedly heard, the Fed announced a new quantitative easing (QE) program on September 13, 2012. It will purchase $40 billion of agency and mortgage-backed securities (MBS) per month until the labor market improves. This amounts to a substantial $480 billion per year, and there is no specific limit on how long the program will last.
"To get a picture of what that continuing policy might look like, I extended the balance sheet of the Fed's assets at that $480B per year out to 2015, keeping all other items unchanged. The Fed said it would be rolling over existing debt as it matures and actually buying $85 billion of assets per month. The crosshatched triangle shows the accumulated growth of the MBS from such a program. By 2015, the Fed balance sheet would grow to $4 trillion, from under $3 trillion today. ..." click through for the the other charts.