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| The Fed owns in excess of $2.4 trillion in Treasury securities. |
Mingdong Wu is a very smart guy, knowing that Treasury securities are in short supply because government spending has been flat to negative since 2009. That makes the price of existing securities go up. This means interest rates are low, because those move inversely to price. To make interest rates go up, increase the supply, as he tells us here:
"The Fed should gradually sell its Treasury holdings to rebalance supply and demand."
Simply brilliant. Of the $2.4+ trillion held by the Fed, $1.1 trillion are 1 to 5-year instruments.
Voila!
