Chamath @ 00:16:59Wrong
economymarkets
Beginning around mid-2022, the Federal Reserve will commence quantitative tightening at roughly $90 billion per month, and at that planned pace it will take about three years to run off approximately $3 trillion of excess assets/liquidity from its balance sheet.
we actually haven't started to remove the money in the system. So the process of quantitative tightening... is going to start now to the tune of about $90 billion a month. But to run off all the money that they printed will still take three years. Right. So we have to take about $3 trillion of excess capital out of the economy.View on YouTube
Explanation
What Chamath described as the Fed’s future QT path did not actually happen, even though the start date and initial plan he referenced were roughly right.
Key points:
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What the Fed officially planned in May 2022
- On May 4, 2022, the FOMC announced that balance‑sheet runoff (QT) would begin June 1, 2022, with monthly caps that ramp up to $60B in Treasuries + $35B in MBS = $95B/month, very close to Chamath’s “about $90 billion a month.” (forexlive.com)
- So his description that QT would start around mid‑2022 at roughly $90B/month was aligned with the announced plan.
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Actual pace was well below $90B/month on average
- The Fed later slowed QT: on May 1, 2024 it reduced the monthly Treasury cap from $60B to $25B (while keeping MBS at $35B), cutting maximum monthly runoff from $95B → $60B starting June 1, 2024. (federalreserve.gov)
- At the March 18–19, 2025 meeting it further cut the Treasury cap from $25B to $5B, leaving the MBS cap at $35B, so the max potential runoff dropped again to about $40B/month starting April 2025. (barrons.com)
- These decisions mean the Fed clearly did not maintain QT at ~90B/month for three years; the average pace over the whole period is much lower.
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Total runoff after three years was far short of $3T
- According to the Fed’s own balance‑sheet report, as of March 26, 2025, securities holdings had declined about $2.1 trillion since QT began in June 2022. (federalreserve.gov)
- A Congressional Research Service note (April 3, 2025) similarly states that the Fed had reduced its balance sheet by more than $2 trillion from its peak since starting QT in June 2022. (congress.gov)
- Three years from the QT start (June 2022 → June 2025) therefore yields ~$2.1T–$2.2T of runoff, well short of Chamath’s “about $3 trillion.”
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QT is ending with < $3T total reduction, even after more than three years
- News reports on the Fed’s October 29, 2025 decision note that QT will end on December 1, 2025, with the balance sheet around $6.6T, down from a roughly $9T peak in 2022—i.e., about $2.4T of total reduction, not $3T. (reuters.com)
- Even allowing for QT running longer than three years (June 2022 → December 2025 is ~3.5 years), the cumulative runoff still doesn’t reach $3T.
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Comparison to Chamath’s explicit numbers
- Chamath effectively assumed $90B/month × ~36 months ≈ $3.2T in runoff, summarized as “about $3 trillion” over “three years.”
- In reality, policy changes slowed QT materially, delivering only ~$2.1T after three years and ~$2.4T by the time QT is scheduled to stop, so both the implied pace and the total were overstated.
Because the Fed did not maintain QT at roughly $90B/month, and total runoff over about three years (and even over the full QT program) falls well short of $3T, the prediction that it would take “about three years” at that pace to run off $3T of excess assets/liquidity is wrong as a forecast of what actually happened.