Will QT Ever Arrive?

Here are the different phases of the Fed's balance sheet. It stops growing at the start of 2014 and stocks gain about 5 percent annualized into the November 2016 Presidential Election. Then the "Trump boom" kicks in with tax cuts boosting corporate earnings. Then QT kicks in starting October 2017 and continues until the Fed pivots in early 2019. Stocks experience a 20 percent correction until the Fed stops rate hikes. Then QT continues for awhile until the summer 2019 repo crisis hints at major trouble coming. The coronavirus ends up being in the right place at the right time for a panic. Then the market surges on insane amounts of QE and federal stimulus. The Fed announces plan for taper in November 2021. The Nasdaq tops almost immediately, the S&P 500 Index in January. Up next, assuming the Fed stops lying about its plans this year (it delayed the taper and has delayed the first stage of QT), is stepping on the accelerator next month with $95 billion in bonds maturing off the balance sheet.

Before QE and QT, the Fed's balance sheet didn't matter. I believe their best course of action is doing nothing because the Fed's balance sheet doesn't seem to do much except prop up equities. By engaging in QT, they will achieve the reverse of QE: a decline in stock prices and nothing else. The central bank is a failed institution that should blend itself back into the background of the economy and financial markets, if abolishing it entirely isn't an option.