US Federal Reserve's Balance Sheet: A Monster

As evidenced from the Table below, from February 2020 to February 2021, the Federal Reserve’s balances sheet has increased by a staggering 80%, mainly driven by increases in its US Treasury and Agency MBS holdings. The FRB purchases these securities in the open market, thereby increasing the amount of liquidity (money) in the economy and concomitantly increasing the money supply. When it sells securities the FRB is draining liquidity from the economy, and therefore decreasing the money supply. The FRB’s balance sheet will continue to increase for the foreseeable future, as they have committed to purchasing monthly at least $80 billion of US Treasuries and $40 billion of Agency MBS.

In thousands of dollars. Source: Federal Reserve Bank of New York