Jamie Dimon, chairman and chief executive officer of J.P. Morgan Chase, said Monday that one of the biggest risks to the U.S. economy is the reversal of the extraordinary measures central banks took to avert disaster after the financial crisis.
Starting about a decade ago, the Federal Reserve and other central banks began to purchase trillions of dollars of government bonds and other securities to inject money into the financial system, a move called "quantitative easing" that was coupled with slashed interest rates. In the U.S. alone, the Fed's balance sheet ballooned to $4.5 trillion from $800 billion as a result of QE.
Now, after more than $12 trillion was pumped into the global system, the U.S. central bank signaled in September that it would begin to unwind the trade. The Fed has already begun by letting $40 billion of its bonds mature each month without replacing them, and other central banks have signaled they will also follow, a process dubbed "quantitative tightening."
