For a few minutes there I listened to the press conference in which Fed Chair Jerome Powell took questions from journalists after the Fed announced it had raised interest rates another 25 bps. As expected, the assembled reporters were trying to ask questions which arranged words differently as they danced around the one central question of whether the Fed thought it was done raising rates and how it would make that dccision in the future. Powell parried the questions deftly and hewed to talking points about patience and observing data. Then I stopped because I figured my time was better spent elsewhere and that I'd be better off reading about it over the next week.
It seems to me that the Fed ought to be expanding its arsenal of tools by letting the world know that it could use open market activities to shrink its balance sheet more quickly. Right now it's just letting the $95 billion a month of bonds run off its book as it's doing now i.e. when bonds mature, it doesn't go out and buy more. This shrinks its balance sheet and tightens money supply. [ not tell the world that it also may start selling a certain amount of debt, say $50 billion or less monthly, out into the market? I think the very variability and uncertainty of this pronouncement could be healthy. When the market is overheated and excited (as it arguably is now), the Fed could sell more.
Another question: back during the height of the pandemic in 2020 in the United States we had, very surprisingly, a super high rate of business formation. What has happened to all those small businesses? How many still exist? Has the survival rate been higher or lower than normal? Of those that don't exist, what were their fates (collapse, acquisition by others or merger, IPO)?
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