Please Excuse my ignorance.
The US Federal Reserve has issued forward guidance telling the world that it is going to start to sell its (well a little less) 4.5 trillion dollars worth of securities that it purchased in 2008.
When the fed purchased bonds from the market this was considered open market operations. When the fed spent dollars to purchase securities it expanded the money supply. Correct?
So now that they are going to unload the securities.
When the fed sells bonds to the market this is also considered open market operations. This type of open market operation contracts the money supply as the fed will sell securities to the market and accept dollars for them. Correct?
As there is such a large amount of securities on their balance sheet, these open market operations are going to have global effects. What could some of the effects be? ( I realize they will do it slowly )
( Effect on Non-US real estate ( the bubbles around the world )) ( US Dollar value ( US Dollar Index )) ( China ) ( Other Central Banks )